Halifax Income Generator 7.45%

sabretoothtigger

Would the Halifax product not be covered by that savings guarantee thing or like a unit trust is protected

I think its a reasonable offer just because I think its so unlikely the FTSE could half while inflation stays in the region of 5%. However on that basis I would probably just hold a tracker as the FTSE pays an ok dividend anyway

Which normal risk corporate bond fund pays out 7 or 10% I have one that pays about 6 but its holding companies from South Africa to Brazil, to most people thats risky

rockitup

The only Structured Product i would invest in would be the Deposit Based type where no worry for 5 or 6 years about the Counterparty going insolvent.

Deposit based ones have the FSCS protection up to the 85k I seem to remember but dunstonh could confirm or set the record straight on that.

Trouble is that the rewards are obviously less the ones with counterparty risk

pqrdef

grey_gym_sock wrote: »

but you are acting as an insurer for somebody else's losses if the stock market crashes (by 50%). you are writing disaster insurance.

Cuts both ways though. If the FTSE is down, but by less than 50%, you get your capital back in full, so somebody else is covering your losses.

Those who buy trackers and point to the dividends tend to ignore the fact that a fairly modest fall in the index, around 20% over 5 years, will wipe out the dividends.

opinions4u

grey_gym_sock wrote: »

i can't see how this kind of product could be suitable for anybody.

Well it looks a decent bet to somebody who wants a guaranteed income and doesn't think the FTSE100 has a cat in hells chance of dropping by 50%.

they seem to be aimed at relatively low-risk investors - people who wouldn't want to put all their money in the stock market, but might be happy to take on a little more risk than staying in cash.

It is only available to customers of Halifax Sharedealing. These are people who have clearly indicated that they are keen to invest in single company shares. That doesn't suggest for a second that it's aimed at low risk investors.

but you are acting as an insurer for somebody else's losses if the stock market crashes (by 50%). you are writing disaster insurance. in exchange for a premium of 2% or 3% per year (i.e. however much 7.45% exceeds the best risk-free fixed rate for the same term), you are taking on the risk in case of an unlikely, but possible, large fall in the stock market.

Which is clearly explained. It is what it is.

if you are a relatively low risk investor, you would be better off putting a small proportion of your money in the stock market (e.g. 20%), and keeping the rest (e.g. 80%) in safe investments. then, if your stock market investments fell by 50%, you would only be down by 10% overall; so the worst case is much less bad.

Correct.

I don't disagree with your assessment of how the product works, but to suggest it's targeted at low risk investors is clearly wrong.

pmjenkins

Which normal risk corporate bond fund pays out 7 or 10% I have one that pays about 6 but its holding companies from South Africa to Brazil, to most people thats risky

The Intermediate Capital Group (ICG7) corporate bond just issued pays 7%. The company is rated BBB-. Would you call that 'normal risk' ?

sabretoothtigger

BBB is same type as most of the Investec bond fund except mine pay out in foreign currency and I guess yours is sterling. Also that is just one single bond from one company, in general thats massively more risky.
Looks a bit like a bank bond

Consider also that the company’s gearing, which stands around 100%, is a small fraction of that which might be employed by a bank.

I do prefer a manager to handle this for me

http://fixedincomeinvestor.selftrade.co.uk/x/mem_selftrade/analysis.html?cat=Analysis%20%26%20Comment&type=Bond%20of%20the%20Week&aid=688

iAMaLONDONER

switch76 wrote: »

http://www.halifax.co.uk/sharedealing/investment-options/structured-products/offer/

1) Pays 7.45% income each year
2) If, at close of business on the final date of the 5 year term, the FTSE 100 is lower than 50% of its starting level, your capital will be reduced by the percentage amount by which the FTSE 100 level is lower than the starting level.

Do you think this is a good product? What are the risks?

It would be a good deal these days!

bowlhead99

Well, the day after the last post on this thread was written, before yours, the FTSE was at 5528. It's now at 6625 or so which is 19.84% higher than it was at the time this was being discussed. Plus dividends of over 3% would have been received if you had bought the FTSE.

So as a market-returns-linked product, delivering under 7.5% a year when the market gave ~23% in 16 months, was in hindsight perhaps not the best option for this particular time period. Obviously a different risk profile to a FTSE tracker of course, and hindsight is 20/20 as they say.

Curious to know if you would really pile into such a product today with FTSE now at all time highs, when if the FTSE were to be 50% lower (excluding dividends) in May 2018 you would lose 50%+ of your savings?

But I suspect you don't actually have any considered opnions or incisive original thoughts of your own, given most of your activity in the last few days has consisted of re-opening threads that died 1-5 years ago and kindly pointing out that interest rates used to be at higher nominal levels. Thanks, we get it...

Reaper

iAMaLONDONER wrote: »

It would be a good deal these days!

Nothing has changed, you can get similar deals right now. e.g. RBS 7.5%
http://www.comparestructuredproducts.com/Structured-Product-Information.aspx?Name=Royal-Bank-of-Scotland-UK-Growth-Kickout-Year-2+-Plan-May-2013&ID=3989&ProviderID=109uctList.aspx

chucknorris

Reaper wrote: »

Nothing has changed, you can get similar deals right now. e.g. RBS 7.5%
http://www.comparestructuredproducts.com/Structured-Product-Information.aspx?Name=Royal-Bank-of-Scotland-UK-Growth-Kickout-Year-2+-Plan-May-2013&ID=3989&ProviderID=109uctList.aspx

I'm thinking about investing in this, I hear what some of you are saying about investing directly in the ftse is better, but my logic is (please feel free to pick holes in it anyone):

I already have 120k invested directly in the ftse, and may invest more, plus a small pension fund partially in the ftse. This for me is about shuffling some of my savings (I have almost 100k earning only 2.6%) and I think it is worth the risk for about 24k, which keeps the return below my capital gains tax allowance if it does run for the full 6 years.