Protected FTSE Plan and Guaranteed Equity bonds - are they same thing?

dunstonh

I'm very unconvinced at investing in commercial property, I see many empty office blocks at the moment before the likely increase in interest rates. I might just go with the Abbey Guarenteed ISA after all.

There is a shortage of commercial property in the UK and that has been one of the reasons why they have performed well. Plus, commercial properties are not affected by interest rate rises in the same way residential property is. If you look at commercial property returns over the decades you will see a closer alignment to GDP.

mariegriffiths

dunstonh wrote: »

There is a shortage of commercial property in the UK and that has been one of the reasons why they have performed well. Plus, commercial properties are not affected by interest rate rises in the same way residential property is. If you look at commercial property returns over the decades you will see a closer alignment to GDP.

Explain Bracknell. There are brand new office blocks that have been empty for years. I suppose it is an isolated case.

I just want my cake and to eat it. I want 100% certainty which is what the Abbey gives me at 23% return over 5.5 years. Is there anything out there that can do better without incurring risk?
23% is 3.8%. I can get a regular saver at 7% taxed at 22% = 5.46% at 40% = 4.2%. I can get a cash ISA at 6.5% so the advantage of the abbey cash ISA is 8.1- 6.5 = 1.6% and I reckon they will drop it after a year so the advantage over 5.5 years = 1.6/5.5 = 0.2%
So 3.8%+0.2% = 4% So I will be worse off with it as compared to a regualr savings account if I get the minimum. As I am a 22%er the difference is more marked, plus there is the greater flexibility of a regular savings account. I think I will leave the stock markety alone and let others with a braver heart take it on.

jamesd

The regular savers will be taxed at 20%, as normal for savings, so a 7% regular saver delivers 5.6%.

For a one year regular saver you get interest at 6.5 * the regular saver rate plus 5.5 * the rate for the savings account where you hold the money before putting it in the regular saver, all divided by 12. Assuming 5.8% taxable for the savings account the 7%:5.8% split comes to 6.45% taxable, 5.16% after 20% tax.

You can beat that without trouble in a wide range of cash ISA accounts, even without one year special offers. An 8% ISA is fine as a starting point. If it reduces the rate later you can just switch the money to another more competitive cash ISA.

dunstonh

Explain Bracknell. There are brand new office blocks that have been empty for years. I suppose it is an isolated case.

How were they funded? Who was the developer?

The quality may not be up to scratch? The area could be unattractive to commercial developments? The cost could be too high (playing on the shortage)? Would the rental yield be enough to cover the purchase?

Porperty funds typically have upto 30% in cash at this time because they cant find enough property. That doesnt mean they are going to blow it on substandard investments.