Halifax Income Generator 7.45%

chewmylegoff

chucknorris wrote: »

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.

The RBS product linked to above only pays out the gains if the FTSE is above the level it was at the point of investment so there is a real risk that you may receive no return on your investment as well as a significantly lower risk that you might lose half your capital. (Plus the counterparty risk inherent in the product).

Personally I would rather have more upside to go with that level of downside risk.

dunstonh

I already have 120k invested directly in the ftse, and may invest more

What else do you have invested? 100% in the FTSE would be poor investing. So, I assume you have amounts in other areas?

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.

It is a SCARP. So, there is no FSCS protection meaning potential for 100% loss if the market counterparty fails. SCARPs can every now and then throw up decent terms at the right times. This forum has seen the Premier SCARPS from 5-6 years ago which paid out 13-16% a year for each year held. However, when the figure falls to current levels and where we are in the economic cycle, you do have to look at whether the potential reward vs risk is worth it.

chucknorris

chewmylegoff wrote: »

The RBS product linked to above only pays out the gains if the FTSE is above the level it was at the point of investment so there is a real risk that you may receive no return on your investment as well as a significantly lower risk that you might lose half your capital. (Plus the counterparty risk inherent in the product).

Personally I would rather have more upside to go with that level of downside risk.

I sort of agree with you, that is the bit that I don't like and that is why I am hesitating. Because if I invested directly in the ftse and the ftse was marginally below the original investment level I would at least gain from the dividend income.

I also don't like the fixed dates, whereas a straight forward ftse investment leaves me in control. I'll probably end up not investing in this structured product but I do want to hear what others think.

chucknorris

dunstonh wrote: »

What else do you have invested? 100% in the FTSE would be poor investing. So, I assume you have amounts in other areas?

I am light in the ftse, this is my current portfolio:

28% cash
7.5% shares
13% pension
51.5% property (not my home which is excluded)

I am currently beefing up my pension by buying additional pension in the teachers pension fund at the rate of 25k a year so in a couple of years my pension portfolio share will increase to about 20%. After that I may consider a SIPP, I'll look further into it at the time. But I may retire in a couple of years and my understanding is that you can't use investment income to pay into a pension, is this correct? So it may not be possible for me to invest much more in pensions.

EDIT: By retirement I simply mean stop working but not drawing a pension, as I would wait until I was 65 to do this.