Capital Protected Structured Deposit Plans

rebecca1

I am currently looking to invest in these. I have been told that my Capital is protected and at worst if the product fails to perform I WOULD get my Original investment back (without interest).
I also have the FSCS protection of £85,000


Question: Is there any other risk I have overlooked? I understand that the Counterparty risk is also covered by the FSCS.


Thanks
Rebecca

ChesterDog

Assuming the guarantees are sound, it would depend on what the return is triggered by or based on. Plus, obviously, your own circumstances and how damaging and likely a zero return would be.

opinions4u

FSCS coverage often doesn't apply to these plans.

See it in writing before you accept somebody's word for it.

(They're usually very restricted in the value they give - don't assume it's a fabulous no risk return).

The Virgin Money offering in their windows at the moment does seem to be FSCS deposit protected but ties your money up for six years with a potential nil return and a maximum gain capped at 5.13% AER.

http://bank.virginmoney.com/savings/pdf/LG_6_Year_Growth_Deposit_Bond_23_%28ISA%29-Key_Facts.pdf

http://bank.virginmoney.com/savings/find/lg_6_year_growth_deposit_bond_23_%28isa%29/calculator/

Wilkins

I would research the counterparty element very thoroughly before you invest. You would have no contract with them and no grounds for a claim if they failed, so everything would depend on the exact nature of the guarantee provided by the issuer.

rebecca1

Thanks for your input everyone who replied...
Wilkins -on the Counterparty Risk side the paperwork states that the deposit would be held by the Financial organisation I am taking the Plan out with. i.e no other party


I guess the burning question is whether the FTSE 100 is higher after the term as if its equal OR lower the interest return will be zero! Now where is that crystal ball ?

ChesterDog

What's the length of the term, Rebecca?

FWIW, I had one recently and after two years got 6% pa from it. They CAN work, but as with anything, don't put too much that way even if you do go ahead.

jimjames

Bear in mind that these are purely based on index level of FTSE. They take no account of any dividend income that would be received and that can equate to 3% or so.

You may be better off making your own plan with money on deposit balanced against an index tracker. Someone else will be able to explain far better than me.

Marazan

jimjames wrote: »

Bear in mind that these are purely based on index level of FTSE. They take no account of any dividend income that would be received and that can equate to 3% or so.

You may be better off making your own plan with money on deposit balanced against an index tracker. Someone else will be able to explain far better than me.

http://monevator.com/guaranteed-equity-bond/

Explains how you can roll your own.

jamesd

There are two general types of these, structured deposits and structured investments. The structured deposit type do have quite strong FSCS protection. Both types tend to be bad value.

They tend to be poor value compared to the alternatives. If you say what the one you're considering is it'd be possible to say a bit more about alternatives that may offer a better deal.

rebecca1

ChesterDoG - The term is 3 years - although I would be happy with a 2 year term also... Was your Plan Capital Protected?
You state don't put too much in - brochure states FSCS protection up to £85,000!


JimJames - " You may be better off making your own plan with money on deposit balanced against an index tracker "
Are these Capital protected? Are they easy to set up?


Rebecca

Marazan

rebecca1 wrote: »

ChesterDoG - The term is 3 years - although I would be happy with a 2 year term also... Was your Plan Capital Protected?
You state don't put too much in - brochure states FSCS protection up to £85,000!


JimJames - " You may be better off making your own plan with money on deposit balanced against an index tracker "
Are these Capital protected? Are they easy to set up?


Rebecca

See my earlier post linking to the Monevator blog. It explains what a Capital protected scheme is, why they are normally complete rip-offs and how you can create your own.