What is a Guaranteed Growth Plan (GGP)?

smallbus

I saw Abbey advertising this in the paper. Guaranteed Growth Plan will give you a guaranteed minimum return of 22% at the end of 5½ years. It also said you could do this in an ISA wrapper.

If it truly is a guaranteed 22%, how come more people arn't doing these instead of cash ISA's? Excuse my ignorence but its the first time I've heard of this! Is it too good to be true?

blinko

because at the end of a 5 year term you would be better off with a savings account

blinko

sorry that might have been a bit blunt thats the main reason why i havent gone for it, it will probably suit higher rate tax payers, i think its linked to the FTSE and you get a percentage of growth or something but for example

cash ISA at 5 x 5.5 = 27.5

so i think this is why people are using their cash isas first

smallbus

Ahh I see! I saw the 22% and thought that was good but I realised after its for the 5.5 year term and not each year! Maybe it is worth doing if someone else pays a higher rate?

dunstonh

Its about potential. You get a minimum of 22% return with potentially more depending on FTSE performance.

There are a number of these types of plans available. This is not one of the better ones.

They can also be used on a MAXI allowance as well as a MINI allowing more tax free saving than a cash ISA.

lipidicman

blinko wrote:

sorry that might have been a bit blunt thats the main reason why i havent gone for it, it will probably suit higher rate tax payers, i think its linked to the FTSE and you get a percentage of growth or something but for example

cash ISA at 5 x 5.5 = 27.5

so i think this is why people are using their cash isas first

The cash ISA is even better than that - dont forget compounding!

(((1+5.5/100)^5)-1)*100= 30.7%

Happy Days!

smallbus

So is anybody bothering with these then?

System

My mother has had several of these that she has had for quite a time, they have performed really badly over time. I wouldnt touch them with a barge pole. I prefer to keep my money fairly accessable so that if a new high rate account comes out, i can shift my money into it.

dunstonh

They are suitable for people who like the potential of stockmarket growth but without any risk to their capital.

There are many variations. Some are very good, whilst others appear to offer little.

It all comes down to attitude to risk.