Skipton Kick Out Bond- Thoughts on this please

SallySunshine

Has anyone any thoughts on the Skipton Kick Out Bond.
I would be grateful for any pro's and con's


http://www.skipton.co.uk/savings_and_investments/bonds/kickout_bond/

Not looking to put much in, my O.H.s friend who is quite money savvy has made a good return on this for a few years, albeit an earlier version.

dunstonh

Its a deposit based structured product. Most structured products tend to offer poor value. The lower the risk of the structured product then generally the lower the quality. There are better kick out structured products available than this. However, the risk levels vary. You should see an IFA. The Skipton product is available to IFAs but so is the rest of the market. Once you know the options and risk levels of each you can decide if you want a 5% KO option like this one or any of those that give up to 9.5% as an annual option.

Not looking to put much in, my O.H.s friend who is quite money savvy has made a good return on this for a few years, albeit an earlier version.

Most people do not make good returns on structured products. Conventional investing tends to result in better results. That said an occasional structured product with the right terms at the right time can pay off nicely. (The Premier one giving around 13% p.a. a few years back may end up as a good example).

SallySunshine

Thanks for swift reply dunstonh, this'll need some discussion in our household. It is a long term investment and I'm not sure about the structure. I would rather put a smallish sum e.g. £1k in a low risk investment than a large sum in a riskier one.

Less return I know, but I wouldn't be losing so much sleep about it.
I'm afraid I'm a cautious investor not an adrenaline junkie:p

No offence, but I am rather wary of investment after very nearly signing up to one and then spotting a risky bit in the small print, we were pushed to sign there and then but I insisted on taking the brochure home and reading something I was not happy with.

.

jimjames

SallySunshine wrote: »

Thanks for swift reply dunstonh, this'll need some discussion in our household. It is a long term investment and I'm not sure about the structure. I would rather put a smallish sum e.g. £1k in a low risk investment than a large sum in a riskier one.

.

Surely the better option would be a small sum in a more risky investment rather than a large sum in risky one? This would then balance out risk against the larger non risky savings. Or was that what you meant?

There was a thread a few days ago from someone that had invested in one of these type of products. Having investigated it they thought they had made a small return of about 1.5% over the last 5 years but on checking it appeared that they had made nothing due to the conditions on the product. Investing directly in the FTSE 100 would have produced a return of 20%+

You are right to be wary of any investment where there is pressure to sign there and then. That happened to me once and it was almost the biggest mistake I ever made (leaving final salary pension for personal one) Companies that do not pressure you to sign up are generally more likely to be honest and open - often pressure means that checking it out and thinking about it will uncover issues that would stop you from signing up.

EDIT - this product seems to have the same issue that the previous poster found on their bond. If the FTSE drops at the last minute it could work in your favour but as they found out if the FTSE rises they won't benefit fully from it.

The Final Value is the average of the daily FTSE readings from 1 February 2016 to 1 February 2017.

Also remember that part of the return you get from shares is the dividend yield - this investment pays none of that so although you might get the return based on the index you get none of the income. Over the last 12 months the FTSE 100 rose 9% but on top of that the shares paid an income of just over 3%. This product pays 5% over the next 12 months if the FTSE is higher - 3% of that payment would be covered by the dividend they receive and it is fairly likely that the FTSE could rise 2% in the next 12 months, in fact it has happened on several DAYS recently.

dunstonh

I would rather put a smallish sum e.g. £1k in a low risk investment than a large sum in a riskier one.

Everything has risk. However, its a sliding scale. The structured products with better annual options are not high risk risk. Most are classed as cautious (some very cautious). Its about finding the balance that is acceptable.

No offence, but I am rather wary of investment after very nearly signing up to one and then spotting a risky bit in the small print, we were pushed to sign there and then but I insisted on taking the brochure home and reading something I was not happy with.

There are something like 50,000 odd investment options out there. All can be placed on a risk scale. To disregard investments because of one of those 50,000 options is not the right thing to do.

Remember that investment risk is just one of the four risks involved with saving and investing. The other three are shortfall risk, inflation risk and provider risk. In some cases, they can be more damaging then investment risk (with a sensible risk level taken).

SallySunshine

Thanks for the replies.
Where would I look to find out about better structured options, not ones that would baffle me though:o

Personally I would rather buy shares in a well known product, especially ones that gave shareholder perks.

judders72

These comments were posted months ago. This Kick Out Bond is closing shortly (29th October). In the light of the fall in the FTSE what is the current view of this investment, recommended by Skipton, and with a guarantee that your capital investment is protected it offers a better return than offered by my current Tracker Account which is only 1% above Bank Rate.

ses6jwg

Dunstonh just out of interest are there are any structured products out there that are any good?

I work in an ex-A&L branch which used to offer Credit Suisse Guaranteed Capital Accounts, a few customers have come in with information on a 5 1/2 year Em erging Markets structured products.

I glanced at the terms and it guaranteed something like 4% AER minimum, but it has performed well so the customer I saw was in the running for around 13% aer

dunstonh

Dunstonh just out of interest are there are any structured products out there that are any good?

You are not seeing the 13-16% kick out ones of pre crash. You can get 9% on a strong market counterparty at the moment. Good Income versions are light on the ground and are paying around 6%