Providence Bonds - 8.25%

dunstonh

Would you recommend this?

No. Neither personally or professionally. It has no FSCS protection and 100% loss of capital potential. The rate is high and way above market rates. That indicates a higher risk of loss as the rate generally reflects the risks.

Reaper

colsten wrote: »

Have you got any link to the published accounts of the parent company?

I believe the parent company is this one:
http://www.provcos.com/providence-global-limited/
which in turn is owned by Providence Group.

I did not look for very long but was unable to find any published accounts. It's registered in Guernsey. I agree I would want more financial info before I invested, perhaps more searching will uncover it.

I wasn't planning to invest, I just thought people were being a bit too quick to dismiss it out of hand.

Thrugelmir

Reaper wrote: »

I wasn't planning to invest, I just thought people were being a bit too quick to dismiss it out of hand.

Taken in isolation as a solitary investment then yes there's reason to be wary. If it's one of a portfolio of such investments. Then it's a different matter.

With interest rates so low for so long. Investors in their haste to make money are over looking the first rule of investing. Don't lose your capital. Sometimes safe and boring is equally as good over the longer term.

jimjames

Thrugelmir wrote: »

Taken in isolation as a solitary investment then yes there's reason to be wary. If it's one of a portfolio of such investments. Then it's a different matter.

With interest rates so low for so long. Investors in their haste to make money are over looking the first rule of investing. Don't lose your capital. Sometimes safe and boring is equally as good over the longer term.

What puzzles me is why these kinds of investments get a look in.

Surely if you are prepared to risk losing 100% of your capital you'd be investing in equity products where 1) you have a bit more guarantee that you'll get your money back and 2)your money is held by a regulated entity so that you are covered in the event of fraud.

These kinds of schemes seem to bandy around the word "guaranteed" but with nothing to back them up and appearing to be designed to entice inexperienced investors who know no better.

colsten

Yes it seems easy enough to find other companies in the group but I haven't found any accounts for any of them. Admittedly I haven't searched very long as I am not very patient in such matters.

Why would they make it so hard for potential investors to find their financial data? Why wouldn't they just publish a link to their accounts as part of the bond offer?

Thrugelmir

jimjames wrote: »

What puzzles me is why these kinds of investments get a look in.

Equity investment carries a 100% loss factor. OW Bunker the third largest Company in Denmark was floated in March. Yet collapsed just 7 months later. There's far too much assumption when people invest these days with an enormous aversion to risk.

jimjames

Thrugelmir wrote: »

Equity investment carries a 100% loss factor. OW Bunker the third largest Company in Denmark was floated in March. Yet collapsed just 7 months later. There's far too much assumption when people invest these days with an enormous aversion to risk.

That's true with individual shares but I was referring to funds and if you invest in say a FTSE 100 tracker then the risk of losing 100% is minimal and you'd be worrying about more than your investments if that ever happened and there was no value in the top 100 companies in the UK.

Just because a FTSE tracker fund doesn't have a guarantee of capital being returned doesn't mean it is any more risky than a bond being issued by a company that cannot fulfil such a guarantee.

dunstonh

I could be completely wrong but I suspect the marketing was aimed at low knowledge investors who wouldnt know the difference between a bond and a fixed term deposit and would incorrectly assume that this bond was actually a fixed term deposit.

Thrugelmir

jimjames wrote: »

That's true with individual shares but I was referring to funds and if you invest in say a FTSE 100 tracker then the risk of losing 100% is minimal and you'd be worrying about more than your investments if that ever happened and there was no value in the top 100 companies in the UK.

The same can be achieved with bonds. Hold 100 different bonds with a £1k in each stock. No management fees to pay either.

My concern with the FTSE is that 40% of the weighting is in miners, oil and financials. So market movements are likely to be extremely volatile.

purch

Mini Bonds such as this, are not tradeable on any exchange, so they are buy and hold to maturity investments.

There are a few of these issued, even John Lewis has done one.

There is an interesting take on Mini Bonds on the Bond Vigilantes blog

https://www.bondvigilantes.com/blog/2014/11/12/mini-bonds-buying/