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Found a brilliant return on an ISA... but why wasn't it on MSE?
Comments
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Just had a look at the Santander link posted above. I'm amazed they can get away selling this product as an ISA as it couldn't be further from the flexibility and low charges that most offer.
The headline statement on their website "With a Flexible ISA you cannot lose." seems designed to trap the unwary.
If you tie into a product that requires you to keep it for 4 or 6 years to get your money back in full and you have to cash in early then that seems to me to be a situation when you will lose.
At least with a regular shares ISA you have no tie in and get money at the current value back whenever you want.Remember the saying: if it looks too good to be true it almost certainly is.0 -
The best rate on the website is 5% above Bank Rate, min 5.5%, for 12 months only. No lock-in.
Are they doing a better rate in-branch?
To get the 5.5% you have to put matching funds in an investment, which can be a 6-year structured product, or an Investment ISA, or a managed fund.
The website has no details on the Investment ISA. Not much on the funds, though it does say there are no initial charges. Annual charges are fairly hefty, up to 1.88% depending on fund. No mention of any exit restrictions or charges.
If you pay the 1.88% and write it off against the ISA interest, you're left with 3.62% on the cash and a 12-month punt on a fund that could go either way.
Though if things start looking bad you can apparently just cash in the fund. Then the ISA rate for the rest of the 12 months drops to 2.35% above Bank Rate, min 2.85%, seen worse.
Seems to me it's quite correct not to rank this deal alongside ordinary cash ISAs, given the odds of losing a packet on the fund. It's more a kind of investment strategy in which you keep half your money out of the market for the time being - maybe not the worst idea in prevailing conditions."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
But if its like other similar ones if you cash in before the 6 years is up you will not get a full return of capital so it is very different to a cash ISA which is presumably why it wasn't listed as one!
Though if things start looking bad you can apparently just cash in the fund.
They say "Your original capital and the minimum return are guaranteed only at maturity. Any return above this is not guaranteed. If you close your Plan early you may get back less than you paid in."
Also "The guarantee that you will receive the money you invested and the minimum return at maturity is provided by Santander Guarantee Company, Investors in the plan are exposed to Santander Guarantee Company’s ability to pay which is dependent on Santander UK plc continuing to be able to meet their financial obligations."
Which given the events of the last 2 years isn't really a very cast iron guarantee as it would not be part of the government £50000 protection/compensation scheme.
With fund supermarkets you can get funds with charges as low as 0.27% pa, thats nearly 1.6% a year more growth you could be getting which is pretty significant.
Generally these structured products can be pretty poor (as an investor) as you get none of the dividends from the underlying investment (potentially up to 5% pa) and your growth is capped at a certain level. If the bank didn't think they could make money from it they wouldn't sell it so they are working on the basis that the market will outperform the capped level. This one quotes 10% or [FONT=Verdana, Helvetica]50% of the [/FONT][FONT=Verdana, Helvetica]growth in the FTSE 100 Index, [/FONT]again not such a great deal over 6 years!
AndyRemember the saying: if it looks too good to be true it almost certainly is.0 -
I wasn't talking about the structured product option, I was talking about the fund option. The high rate ISA is available if you put matching funds into any of the investment products, as I understood it.But if its like other similar ones if you cash in before the 6 years is up you will not get a full return of capital
I'm not a big fan of the structured product. Too much money tied up for too long, for a blind bet. Wherever the Footsie might be after 6 years, it's as likely to be in the same place after a year."It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis0 -
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discopatrick wrote: »will be back with a follow up!
........... bring some Brasso. You'll need it to make this product look anything like shiny!If you want to test the depth of the water .........don't use both feet !0 -
I will have to check this with the bank. I was under the impression that the higher interest rate would be there even if I put only, say, £25 per month into the investment ISA. If I have to put the same amount in, I'm not so up for it.Sceptic001 wrote: »If it is their "Super Flexible ISA" :rotfl: I think you will find that you only get the juicy interest rate (for 12 months only) "when you pay the same amount or more into a separate qualifying investment product from Santander"
I do realise that financial advisors are also salesmen - I'm not completely stupid - but I thought I covered all the questions in my meeting with Santander and left the bank thinking this was a good deal. Maybe I missed a key point (above), but let me ask the bank again and I'll let you know what they say.
I probably should have started this thread with "can somebody help me figure out if this is a good deal" rather than "why didn't I see this great deal here".
FYI, I haven't bought anything yet.0 -
You just get the 'super' ISA rate for the first year, then it becomes a Flexible ISA (currently BoE rate + 2.35%), and you have to invest at least as much into an investment product.
Full details here http://www.santander.co.uk/csgs/Satellite?appID=abbey.internet.Abbeycom&canal=CABBEYCOM&cid=1210610545388&empr=Abbeycom&leng=en_GB&pagename=Abbeycom%2FPage%2FWC_ACOM_TemplateB20 -
No don't do that, they have already bamboozled you. What you should do is read the T&Cs for this "outstanding offer " and all will be revealed.discopatrick wrote: »but let me ask the bank again0 -
After 12 months, it actually becomes "Flexible ISA excluding the minimum rate guarantee and base rate tracker", so will pay nothing like the current rate but just 0.5% AER, as per the interest rate table HERE.You just get the 'super' ISA rate for the first year, then it becomes a Flexible ISA (currently BoE rate + 2.35%), and you have to invest at least as much into an investment product.
Full details here http://www.santander.co.uk/csgs/Satellite?appID=abbey.internet.Abbeycom&canal=CABBEYCOM&cid=1210610545388&empr=Abbeycom&leng=en_GB&pagename=Abbeycom%2FPage%2FWC_ACOM_TemplateB20
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