Nationwide Protected Equity Bond 6 yr fixed

Aegis

chess_010 wrote: »

Can you please explain further why this is not a good product? It is a 7% min gross AER or greater up to 50% above and if as a ISA plan so assuming that no more money is invested apart from initial payments say £5340 (Max for ISA next year) invested in 2011-2012 ISA plan surely this will be quite good return? not sure of caluation but 7% equals £373.80 added to initial £5340 = £5713.80 . Is this a poor return bearing in mind no one really knows how ecomony will be in future years

It's not 7% AER it's 7% for the whole term, i.e. 1.13% AER. Given the cap is 6.99% AER and for that the FTSE would need to stand at around 9,000 in 6 years time, I just don't think it's worth it, especially when you consider that the FTSE index effectively "bleeds" 3-4% each year in dividends that you don't receive with a product like this.

dunstonh

There are far better versions available on the whole of market should you really want a structured product. However, in reality, its a niche product that you should have no more than 25% of your investments in and you need to be aware that those with good terms are rare. You tend to see good ones after a market crash and poor ones after a good run on the markets. Current versions are generally poor quality.

Loughton_Monkey

steve3812 wrote: »

dunstonh :mad: you never really answered the question why is the product poor? If your going to state the product is poor state why dont blame it on poor sales staff. Surely if your guranteed a min return of 11% you cant lose. If the market does well the 11% could be more.

For a start, it's a 'structured' product and as such contains a lot more provider risks - not covered by FSCS

"If Nationwide Building Society, or the bank or building society providing the Legal & General client bank account were to become insolvent you may lose some or all of your money."

Apart from that, no, you can't 'lose', but 7% over 6 years (minimum) is a bit of a slap in the face isn't it?

It is necessary to understant the facts:

1. Your money is not invested directly into stocks and shares.

2. Some, or all of it is invested in "derivatives" - which are essentially plastic imitations of equities that are not 'real' but represent a gamble.

3. When you gamble on a horse race, you have some understanding of the gamble. Here, you are gambling on 3 stock exchanges, with different currencies, and 'averaged' over the final year.

The 'gambles' represent the purchase of these derivatives that are dreamt up in some back room, and sold (with commission) to Stock Brokers and in turn (with more commission) to the banks, and finally (with even more commission) by the bank salesman to the customer.

If I am 'buying' a gamble that is 'worth' £80, I wouldn't pay £100 for it. That is exactly what you are doing in a structured product.

It is a matter of extreme irony that FSA allow such 'complex' products, where the individual components of the 'derivatives' are legally kept secret, to be sold by a commission-based sales force.

I cannpt remark specifically about this one, but I believe 'structured products' to be one of the most 'toxic' investments available.

jimjames

If you invested in a equity income fund then you'd get 4% per year dividend (variable but approx 24%) plus all growth in the FTSE over 6 years - I know which I would prefer.

There is also a risk with income funds so if every company in the FTSE 100 went bust then you'd lose all your money but if that happened I don't think money would be top of your concerns. I think the chances of a structured product from a bank going bust to lose all your money are a little higher than every company in FTSE going under.