New Nationwide Protected Equity Bond

Lizerazou_2

Hi,
I have around 50k in Nationwide at the moment and need to move it into some products with better returns asap. I am nervous of investing in stocks and shares at the moment, so was looking at bonds and ISAs today but they told me about a new product which I can apply for from Monday which sounds interesting. It's a Protected Equity Bond, which involves putting a minimum of 20k into a 6 year fixed term investment (they tell me I cannot lose my investment, at the very least I would get my 20k back), plus a 1 year fixed bond and a 3 year fixed bond, both with respectable rates of interest. This sounded quite appealing to me, as it combines the possibility of making some gains from investments without the greater risk of other investment packages.. They tell me I would also have to put an equal amount (so 20k) into the two savings bonds, which I could do. Does anyone with any experience of these things have any views on this type of package?!

pressuredrop_2

After six years you could receive 0% on your capital. I fail to see the attraction.

I guess Nationwide receive their commission from the investment provider. So they're happy.

As usual, the customer takes the risk, the bank gets the reward.

Personally, I think high street banks should be banned from selling any investment product.

lisyloo

Generally high st banks investment products are very poor.

dunstonh

I have yet to see a Nationwide structured product ever come out near top.

It's a Protected Equity Bond

Note the word protected. Not guaranteed.

they tell me I cannot lose my investment, at the very least I would get my 20k back

What if the market counterparty fails?

Does anyone with any experience of these things have any views on this type of package?!

Typically naff. Low quality products sold to low knowledge consumers by low skilled sales reps.

missile

dunstonh wrote: »

Typically naff. Low quality products sold to low knowledge consumers by low skilled sales reps.

Harsh words but true :T

dunstonh

There is nothing wrong with being a low knowledge consumer. Most are. If everyone was knowledgeable and experienced I wouldnt have a job. However, the banks (and building societies) play on that and use it to their sales advantage. It allows them to offer low quality products or expensive products or cash cows (for them) because the typically consumer wouldnt know what is good or bad.

i once asked a senior banking official why their products were so poor quality. He replied that the money just keeps coming in and there is no point spending more money and reducing profits by making them more competitive in the market place.

payless

dunstonh wrote: »

I have yet to see a Nationwide structured product ever come out near top.



Note the word protected. Not guaranteed.



What if the market counterparty fails?



Typically naff. Low quality products sold to low knowledge consumers by low skilled sales reps.

#

In fairness Dunstohn.. and without commenting on value nor suitability, the plan appears to be classed as a (Nationwide) cash based deposit account for FSCS purposes and no additional counterparty risk

dunstonh

payless wrote: »

#

In fairness Dunstohn.. and without commenting on value nor suitability, the plan appears to be classed as a (Nationwide) cash based deposit account for FSCS purposes and no additional counterparty risk

I wonder why they are using the word "protected" then. Cash based ones with no additional counterparty risk are allowed to use the word guaranteed. The ones with counterparty risk are not and thats when they use "protected" or similar.

sabretoothtigger

20k back in six years might mean you have lost 5% per year to inflation which compounds to a loss of about a quarter of your present capital

Savings are risky I reckon, the longer term fix rates especially

(they tell me I cannot lose my investment, at the very least I would get my 20k back)

If theres no inflation for the next six years then they are right, you will get back your original investment. If they are wrong and inflation occurs, you will lose some of your money

Lizerazou_2

Thanks everyone for your responses, I really appreciate it. Back to the drawing board, I think!
Best wishes, Liz