Abbey Super ISA 8%

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I was looking on their website about their Super ISA and thought that it may be useful to some people. I'm sorry if this has been mentioned before, I didn't see a post when I searched

This is useful to you if:

• You want to save up to £3,000 in a tax year without paying any tax on the interest and you want to put the same amount or more into the tax efficient Guaranteed Growth Plan
  
• You want to leave your money untouched for 3-5 years.

Has anyone got this ISA? I was going to open an ING one as it allows easier access to money as I don't have enough for a 3-5 years investment. Also the growth plan puts me off a bit

I have not read all the terms and conditions but 8% AER seems quite high so I'm assuming that the long term lock up of your money and growth plan are the 'catch' here.

Any thoughts

dillydilly

yes intriguing one this. A quick look seems to suggest you invest an amount, say £1000, into the ISA at 8%, then another £3k in the guaranteed bond for 3-5.5 years.

Playing around with the numbers, I make the minimum return would be the equivilent of a 5.5% fixed ISA over the 5.5 yrs. The breakeven is then for the FTSE to move to about 7600 in 5.5 yrs time. Any higher and you're beating the 5.5%.

Maybe I have my math wrong, but on the face of it seems a good deal - though please challenge my numbers, I would expect the minimum to be nearer an equivilent of around 3-4% to allow for some profit for Abbey no ? (note on top of the return on the bond I've assumed the 8% gives you an additional 2.5% above what you'd otherwise get)

ctdctd

dillydilly wrote: »

yes intriguing one this. A quick look seems to suggest you invest an amount, say £1000, into the ISA at 8%, then another £3k in the guaranteed bond for 3-5.5 years.
Playing around with the numbers, I make the minimum return would be the equivilent of a 5.5% fixed ISA over the 5.5 yrs. The breakeven is then for the FTSE to move to about 7600 in 5.5 yrs time. Any higher and you're beating the 5.5%.

Be careful - you only get the 8% for one year - but you are stuck with the guaranteed bond for 5.5 years which only guarantees 3.85% compounded:-(

So you would get 8% + 3.85% / 2 in year one = 5.92% but after that you would only get 5.5% + 3.85% / 2 = 4.67% - not so good. (5.5% = Direct ISA up to 9K).

Over 5.5 years Cash bit = 37.4% or so, bond = 23%, total = say 60.4 / 2 = 30.2% which equates to 4.92% compounded. To get any more, the FTSE100 would have to rise by 46% - so above about 9000

Ian_W

Personally I wouldn't touch it with your bargepole for the reasons outlined above by ctdctd!
The 8% is excellent but it's for 1 year only - a loss leader to get you to commit at least the same amount to the GEB for 3 or 5yrs which is unlikely IMO to produce more than the basic guaranteed minimum.

dillydilly

ahh one year, that's the catch I missed... thanks chaps, will stick to hopping around the best introductory rates

oldfella

rule 1 dont buy an investment product from a bank

rule 2 - see rule 1

cs95aam

This article in the Times Online doesn't rate it much either:

http://business.timesonline.co.uk/tol/business/money/savings/article1477880.ece

Abbey’s Super Direct Isa has an even bigger catch. The deal is available for Isa transfers as well as new money, but customers must invest an equal amount into a new protected plan, the Guaranteed Growth Plan 8, or one of Abbey’s equity funds. So if you planned to invest the maximum £3,000 for this year and transfer £9,000 you have in cash Isas from previous years, you would have to put £12,000 in the linked protected plan or equity fund. Advisers say this trade off is not worthwhile.

The Guaranteed Growth Plan 8 is linked to the FTSE 100, although it gives 100 per cent capital protection. So even if the stock market falls over the next three years, investors will get their initial investment back, plus 9 per cent – equivalent to 3 per cent a year. However, if the footsie rises over the next three years, investors will only get 50 per cent of the growth.