Natwest 30% 5.5 year Bond

PM

I got a call from Natwest and they booked me an appointment, I was just wondering if anyone has any knowledge on product.
Its a 5 and half year bond, invest min. 3k max 30k and get 30% interest and link to index.

I havent been given any material and they asked me to come to my old branch on other side of London for meeting.

Anyone has any input much appreciated.

Mikeyorks

It's a Guaranteed Equity Bond (albeit they call it an Index Bond). The only 'guarantee' on offer appears to be you will get your money back after 5.5 years. If there's 30% on offer then they're remarkably reticent on that - so I would take that as a warning that the 30% is likely an estimate. And the likelihood is you will get far less.

If you search on these forums for GEBs you will find the generality of advice is to avoid ............. if from a High St Bank - the advice is to avoid at all costs.

Link here but very little info. Make sure you read the Important Information tab carefully - and note the absence of any guaranteed returns over and above your initial deposit!

http://www.natwest.com/personal/investments/g1/investments-for-everyone/fixed-term-investments/index-bonds.ashx#tabs=section1

alanq

See https://forums.moneysavingexpert.com/discussion/2548165

Burado_san

It's not a guaranteed equity bond as the post above states. Its a deposit based investment just like a fixed rate bond and it can even be part cash ISA.

You will either get your original investment back if the FTSE 100 is lower after 5.5yrs, or you will get a fixed 30% return if it's level or higher after 5.5yrs. Nowhere in between.

Not a bad solution to low rates for some o your cash, although I still prefer investing in stocks and shares.

joerugby

Burado_san wrote: »

It's not a guaranteed equity bond as the post above states. Its a deposit based investment just like a fixed rate bond and it can even be part cash ISA.

You will either get your original investment back if the FTSE 100 is lower after 5.5yrs, or you will get a fixed 30% return if it's level or higher after 5.5yrs. Nowhere in between.

Not a bad solution to low rates for some o your cash, although I still prefer investing in stocks and shares.

30% over 5.5 yrs is equivalent to a compound annual rate of 4.88%

So you can get 4.88% from Natwest if you are prepared to take the risk that the return may be zero ............

.................. or 4.55% from the AA which is guaranteed.

It's up to you really!

olivetti

Burado_san wrote: »

It's not a guaranteed equity bond as the post above states. Its a deposit based investment just like a fixed rate bond and it can even be part cash ISA.

You will either get your original investment back if the FTSE 100 is lower after 5.5yrs, or you will get a fixed 30% return if it's level or higher after 5.5yrs. Nowhere in between.

Not a bad solution to low rates for some o your cash, although I still prefer investing in stocks and shares.

Sounds like a GEB to me.

They are not even 100% guaranteed as L&G/Lehman Bros customers of similar products will tell you...

Prudent

What is a GEB?

Ifts

Prudent wrote: »

What is a GEB?

Guaranteed Equity Bond

Burado_san

How the return is achieved is similar to a GEB, granted. However, your money is not invested in assets and the product is deposit based, which means it's cash. Therefore your money is as safe as it would be in any other savings account. So yes, if the bank fails and the government can't afford to honour it's £50k guarantee, you would lose your money - EXACTLY the same as any other savings account.

If the AA offers a bond for 5yrs at 4.55%, I would take that instead, but I wasn't aware they do. Nor am I aware if it would available as part cash ISA like the NatWest Index Bond.

I just have an issue with people in this forum giving advice on products they don't understand. At least do your research and then tell people not to do it.

joerugby

Burado_san wrote: »

How the return is achieved is similar to a GEB, granted. However, your money is not invested in assets and the product is deposit based, which means it's cash. Therefore your money is as safe as it would be in any other savings account. So yes, if the bank fails and the government can't afford to honour it's £50k guarantee, you would lose your money - EXACTLY the same as any other savings account.

If the AA offers a bond for 5yrs at 4.55%, I would take that instead, but I wasn't aware they do. Nor am I aware if it would available as part cash ISA like the NatWest Index Bond.

I just have an issue with people in this forum giving advice on products they don't understand. At least do your research and then tell people not to do it.

Don't get so excited Burado san!

I'm well aware that this is a cash investment in a Natwest Treasury Reserve account and that the capital is safe, as it is with the AA.

As I said above it's the return which is at risk - with Natwest the return will be either 4.88% or zero depending on the fortunes of the FTSE over the next 5 years. With the AA the return is a guaranteed 4.55%

Whether 0.33% is a sufficient risk premium is up to you

atypical

joerugby wrote: »

.................. or 4.55% from the AA which is guaranteed.

Or 4.90% for 5 years with Bank of Baroda. They're FSCS protected.

To make it clear, that's a guaranteed better return than NatWest.