8.5% bonds on 500thousand over 3 years?

MichaelCollins

Hi there. Was just wondering what people thought about this. I posted an idle question on a seemingly reputable site called the-investment-experts.co.uk regarding what an average risk return if I put 500 grand away for 3 years would be, and they came back with

[FONT=&quot]However, we do know of several bonds that offer 8.5% over a 3 year period – low risk with an above average return. This would give you a return of £127,500 over the 3 years, plus the return of your capital.


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I'm no expert but this seems like a ridiculously high number does it not? Could it be a scam?

JohnRo

What they probably mean by low risk, is there's no guarantee of avoiding a substantial or total loss.

I'd be more than a little suspicious reading unqualified claims like that.

dunstonh

I posted an idle question on a seemingly reputable site called the-investment-experts.co.uk

That site confirms they are not experts. They are not regulated to give investment advice or opinion. They are just introducers to others that are.

Stick to regulated advice firms when you want advice. Not unregulated third parties.

bigfreddiel

If some stranger down the pub gave this advice would you believe it any more than some strange website?

What about a cold call?

Cheers fj

jimjames

MichaelCollins wrote: »

[FONT=&quot]However, we do know of several bonds that offer 8.5% over a 3 year period – low risk with an above average return. This would give you a return of £127,500 over the 3 years, plus the return of your capital.

Just because someone says they'll return your capital doesn't mean you'll actually get any money back. Ask the people who bought into guaranteed "storage pods" a few years ago and the people who are buying airport parking spaces now.

If you want investment advice why would you use an unregulated firm rather than using someone who is properly regulated with regulated investments that have a level of protection.

Pincher

BP.A BP PLC 8% !!! 1ST PRF #1

BP.B BP PLC 9% !!! 2ND PRF #1

Since one of them pays 8%, and the other pays 9%, if you buy 50:50 of each, the average yield is 8.5%, isn't it?

If only people don't bump up the price by paying too much,
163.50p, forcing the yield down. Pesky other people. :rotfl:

Malthusian

Why would someone offer a three-year deposit paying 8.5% with guaranteed return of capital when they could pay half that coupon and still have every investor in the country beating down their door?

If it's not a deposit, but a corporate loan, then it's extremely high risk, with a significant chance of losing every penny. If it's not a scam it's rubbish. If something has above average return it has above average risk.

Out of interest, why do you say that they are "apparently reputable"?

polymaff

Call me a sceptic, but I'm always wary of a company that cannot spell its own name consistently.

dunstonh

Out of interest, why do you say that they are "apparently reputable"?

I bet its because the person is from the internet generation where reputable means nice website.

Gadfium

dunstonh wrote: »

I bet its because the person is from the internet generation where reputable means nice website.

^^This^^

The website in question uses a virtual office (postal address, rented telephone receptionist) that states it is an introducer to an IFA that operates out of a residential address in Middlesex. The virtual office gives it an appearance of being a central London operation, the website uses an altered "Made in Britain" symbol (modified to read Trust Britain) and a spurious "Authorised and Regulated" symbol.
It's no wonder that so many people are so easily duped.

Aretnap

UK government bonds are what I'd call low risk. They currently yield around 0.9% for 3 years.

3 year Greek bonds, on the other hand will pay you about 7.5%. So a yield of 8.5% implies a risk similar to, or slightly greater than, that of lending your money to the Greek government. I wouldn't exactly call that a low risk investment. Assuming it's a legitimate investment at all, of course.

If it's not a scam then it's significantly more risky than they're letting on - either way I'd steer well clear.