Nationwide/Derbyshire Protected Equity Bonds

DougWeller

Given the current and foreseeable future, are these any good? I've got some money I need to invest (one of those 1/11 Santander tracker bonds!) and was thinking of putting say £10000 into one of these. http://www.nationwide.co.uk/investments/protected-equity-bonds/default.htm http://thederbyshire.co.uk/protected_equity_bond.aspx - We have 2 cash ISAs maturing that we could use (although I see it says something about £3600).
Thanks
Doug

dunstonh

Given the current and foreseeable future, are these any good?

The good ones are. The bad ones are not.

The structured products you have linked are not good examples. Although I havent had a chance to see if they are deposit backed or not as I have to fly off now. investment backed ones with strong market counterparties are now at 10% for each year.

You would never expect the nationwide to have the best ones.

shackalak

With these bonds, basically the money is held on deposit and the returns paid are based on the % return of the linked stock market indices over the bond term. Generally, these bonds are 6 year bonds but they are issued in tranches and the term can vary on different tranches (between 3 and 10 years). They fall under the deposit part of the Investor Compensation Scheme.

These bonds can be set up under the Cash element of an ISA and with an ISA, withdrawals can be made during the term but this would mean that the the 'protected' element on the initial capital investment would be lost. If the bond is not set up under ISA rules, no withdrawls are allowed during the term.

In a nutshell, if the bond is held for the full term, your inital capital investment is protected even if the stock market indices it is linked to fall every year - so you get your money back but no interest if the markets fall. If the markets rise, your return is capped at the percentage stated for the issue of bond you are investing in. Your return could be anything between these two figures. It is a way of investing with the potential for stock market growth with a safeguard on your initial capital.

The thing to remember with these bonds is that once your money is in, you need to leave it in for the entire term so you need to make sure this money is money you will not need to use during the term of the bond.

I would call into the branch and speak to one of their advisers, they will talk you through the benefits. If you are looking for advice, make an appointment with one of their Senior Financial Consultants. They will be able to carry out an assessment to see if the product is right for you.

dunstonh

I would call into the branch and speak to one of their advisers, they will talk you through the benefits. If you are looking for advice, make an appointment with one of their Senior Financial Consultants. They will be able to carry out an assessment to see if the product is right for you.

Better to see an IFA rather than a Nationwide sales rep. The IFA has access to the same products but also whole of market alternatives.

oldvicar

What are the risks?

You should be aware of the following risks before investing:

• You will not be able to withdraw funds from the Deposit Plan until the end of the six year term.
• If Nationwide, or the bank or building society providing the Legal & General client bank account became insolvent you may lose some or all of your money.
• The value of the money you invest will depreciate unless the performance of the product meets or exceeds the rate of inflation.
• If you have to take out money from the ISA before the end of the six year term, you may get back less than you originally invested.
• In the event of your death during the six year term and the early closure of the Plan by your beneficiaries, the amount returned may be less than your original investment.

:eek: So whilst it can be a cash ISA deposit, it rather looks as if normal deposit rules and the FSCS guarantee doesn't apply. TBH I find it confusing how it can be both an INDIVIDUAL Savings Account deposit, actually deposited with Nationwide, and yet not be covered. But its not a product which tempts me anyway.