Guaranteed Equity Bonds

ant2006

Hi.

Okay - I was just checking out some info about premium bonds, when I got distracted by some flashing advertisement and clicked on it.

The description of this investment scheme is : 112% of any FTSE 100 growth with no risk to your capital.

So...what does that mean exactly? And is it any good?
Or should I ignore this as a gimmick and leave it alone?

Thanks.

dunstonh

Gimmick and leave alone. They are cash cows to the issuer. There are far better and cheaper ways of doing it.

steady__eddie

I think that a major factor to consider here, which you have unfortunately not mentioned is the time period involved. There must be a termination date, if say it was in 7 days time then given the rollercoaster ride of the footsie as of late on a daily basis then you could be onto a winner. Conversely you could of course be onto a loser depending upon whether the footsie is on an upper or downer next Monday. If the time period is say 10 years, the worst case scenario could mean that the footsie is lower than it is now and you will have lost 10 years interest from the more traditional forms of savings. Although you will get your original investment back, it will then have been eroded by inflation.
I personally avoid these forms of "investment" but if you have a reliable crystal ball, then go for it, if not then I reckon you should carry on researching premium bonds.

dunstonh

eddie, there was a thread a month or two back where I showed a much better way of doing a "homemade" GEB.

GEBs are expensive (you dont see the charges because they are implicit rather than explicit), they are limited because they tend to track the FTSE100 (the worst performing UK index in the last 8 years) and they average out performance reducing investment potential.

No one should "go for it" with these. They are worse than premium bonds which are just another excuse for being wasteful with your money.

ant2006

Cheers guys.

dunstonh

http://forums.moneysavingexpert.com/showthread.html?t=196334&highlight=guaranteed+equity+bond

There's the thread in question.

steady__eddie

I knew that I had read a thread about these wastes of time but I was unable to find it due to matters beyond my cerebal control, thanks for the link.