Post Office Five Year Saver - what do you think?

Hologram_2

I've recently signed up for a Post Office credit card and am totally impressed with it. Based on that I'm thinking of buying a PO 5 Year Saver, does anyone have one and what do you think of it?

It starts at £500 and they guarantee 37% compound interest on half of the investment, the other half attracts an uncapped rate based on the growth of the FTSE 100. They pay 50% of the growth of the FTSE over 5 years. As 2012 looks to be a good year for UK finance (hopefully!), then I'm thinking it may pay off.

Anyone think it's OK, or not??

dunstonh

Usual rubbish product aimed at people who wouldn't know a good product from a bad one. This one is seriously poor quality.

Hologram_2

dunstonh wrote: »

Usual rubbish product aimed at people who wouldn't know a good product from a bad one. This one is seriously poor quality.

You don't seem to have offered any reasoning for your negative comment. Why do you think it's "seriously poor"?

dunstonh

Hologram wrote: »

You don't seem to have offered any reasoning for your negative comment. Why do you think it's "seriously poor"?

Because its a bit of an FAQ on here.

However, take high implicit charges, Capped potential for growth. Poor quality index to track, no dividends (linked in with charges), all money invested in one area (assuming the people that would consider these are inexperienced investors).

You could also argue that it may not be the best of times to go into equities with no income benefit.

BornSloppy

It looks dodgy to me even though the post office is a genuine company. Sounds too good to be true. Get an ISA

SeanW

If the FTSE averages out at the current rate or less, you will only get a return equivalent to 3.6% AER gross.

If the FTSE is up 75% average, you will get a return equivalent to 6.5%.

You can almost get 6.5% now with fixed rate bonds, and that is guaranteed for the length of the term. It suffers from the same problem with rates going up, but doesn't suffer the risk of 3.6%.

Hologram_2

Got an ISA, ta.
"If the FTSE is up 75% average, you will get a return equivalent to 6.5%.

You can almost get 6.5% now with fixed rate bonds, and that is guaranteed for the length of the term. It suffers from the same problem with rates going up, but doesn't suffer the risk of 3.6%." So a possiblilty of 6.5% PA growth on half and 37% (over 5 yrs) on the other half, doesn't sound too bad to me.

I have also looked at the Abbey one which gives 150% growth of the FTSE over a year, I feel that's a possibly better punt for someone who doesn't have too much money to invest.

What are your feelings on Abbey versus the PO?

SeanW

So a possiblilty of 6.5% PA growth on half and 37% (over 5 yrs) on the other half, doesn't sound too bad to me.

No, 6.5% in total.

Say FTSE averages out over the last year (the way its usually calculated) at 17500, and it started at 10000. It's up 75%. The nice Post Office cap you at 50% of the rise, so 37.5%.

37.5% 5 year growth on half. 37% growth on the other half. This is around 6.5% pa.

Of course, the FTSE could go up 10 fold.

The Abbey one has absolutely no growth if the FTSE ends up equal to or less than when you open it.

They are almost all as bad as each other, I remember seeing one recently that equated to about 4.5% pa if the FTSE dropped or didn't move, and is the best I remember seeing.

jamesd

For a better deal look at UK absolute return funds, UK equity income funds and global high yield bonds.

Each is likely to rise more than enough over 5 years to cover a significant fall in their particular market and leave you ahead, while the combination is likely to significantly outperform the GEBs you're looking at.