too good to be true

andrikos

Basset and Gold offer a 5 year fixed income bond at the fixed interest of 5.52% which receives a fixed amount of £230 per month direct into one's bank account, assuming an initial investment of £50k. As this seems to good to be true I proceeded to enquire whether at the end of the 5 year bond I will receive my initial investment intact, irrespective of the bond's performance and I was assured that this was indeed the case. Am I missing something in the small print as this is better than a fixed cash Isa the best of which these days offer an interest of less than 1.5%?

ColdIron

This is not a savings product and your capital is at risk

Did you read the Risk Factors page?

Your capital is at risk. Click here to learn more about the risk factors.

msallen

Its amazing how all these threads enquiring whether something is too good to be true are started by new posters. Its almost as though the scammers think that people will read a post questioning the legitimacy of their scam and decide to go for it anyway - unfortunately there probably are people that will.

ColdIron

This is not a scam, it is a legitimate product, even though Thornbridge Investment Management LLP (the company that Basset & Gold are an Appointed Representative for) have only been incorporated since 18 Mar 2015. Both companies are authorised by the FCA

What it is not is a cash deposit product with FSCS protection

This isn't helped by the loose definition of 'bond' and 'investment' but is quite obvious by reading more than the first page which most of the people who start these threads seem incapable of doing

jimjames

andrikos wrote: »

I proceeded to enquire whether at the end of the 5 year bond I will receive my initial investment intact, irrespective of the bond's performance and I was assured that this was indeed the case.

If you were really told this then you are being lied to and this could be considered a scam. It clearly says otherwise on their website


Basset & Gold Fixed Income Bonds are an unsecured debt of the Company and there is no certainty or guarantee that the Company will be able to repay them.

bowlhead99

andrikos wrote: »

Am I missing something in the small print as this is better than a fixed cash Isa the best of which these days offer an interest of less than 1.5%?

If you clicked the "large print" floating banner on every page it would take you to the risk factors which include:

Illiquid investment
Investment in an unquoted security of this nature, being an Illiquid investment, is speculative, involving a degree of risk. It will not be possible to sell or realise Basset & Gold Fixed Income Bonds or to obtain reliable information about the risks to which they are exposed.

Basset & Gold Fixed Income Bonds are an unsecured debt of the Company and there is no certainty or guarantee that the Company will be able to repay them.

No Certainty
The Basset & Gold Fixed Income Bonds are an unsecured debt of the Company and will rank pari passu with all future unsecured debts of the Company. There is no certainty or guarantee that the Company will be able to repay them. If the Company were to become insolvent, there is a risk that (a) some or all of the nominal value of the Basset & Gold Fixed Income Bonds will not be redeemed, and (b) some or all of the return due on the Basset & Gold Fixed Income Bonds will not be repaid

Special purpose vehicle
The Company is a special purpose vehicle established specifically for the purpose of issuing the Bonds and lending the proceeds to the Borrowers. The Company has no assets of its own and no means to pay the interest and principal on the Bonds except for the proceeds of its funding activities. In the event that a Borrower is not able to pay the interest and/or principal in respect of the funding facilities, the Company will not be able to pay the interest and/or principal in respect of the Bonds.

Future performance
Past and future performance does not imply that future trends will follow the same or similar pattern. Forecasts made in this Invitation Document may not be achieved. There is a significant risk that Investors will not get back a part of, or any of, their investment. There can be no assurance that the Company’s and the Borrowers’ objectives will be achieved and investment results may vary substantially over time.

You say this is better than a fixed cash isa. However, a fixed cash isa guarantees your money back. This explicitly tells you all over the website that you should not expect your capital back let alone any profits on your capital. That is not better than a cash isa if the goal is getting your money back.

Ignore the fact that FSCS *may* pay compensation to an eligible claimant. If your investment fails and they do not get your money back, you have made a loss, but you have nobody to claim against, because losses up to 100% are expected - as they told you in the risk warnings.

FSCS does not cover investment losses made by an investor who lends money to someone who lends it on to someone else who can't pay back. Otherwise investing in normal commercial ventures would be risk free to an investor and nobody would use banks and the FSCS would drown in claims.

FSCS *might* cover a situation where the Company does recover all the money from its borrowers but never gets round to paying you back, and collapses while holding your money. However, note that Thornbridge, the firm with the FCA permissions that Basset & Gold represent when selling you investments, is not authorised to hold client money and that is not its role in the structure.

Ergo, any claim that you can ignore all the printed risk warnings where they say you can lose all your capital, because - don't worry, FSCS will definitely cover you - is nonsense.

dunstonh

As this seems to good to be true I proceeded to enquire whether at the end of the 5 year bond I will receive my initial investment intact, irrespective of the bond's performance and I was assured that this was indeed the case.

It is not a retail financial product. It has 100% loss potential. It has no FSCS protection and is an option that should only be considered by experienced investors with high net worth who dont mind putting small amounts into unregulated areas (typically seen as no more than 5% of their savings/investments).

Am I missing something in the small print as this is better than a fixed cash Isa the best of which these days offer an interest of less than 1.5%?

Cash ISA is deposit based with FSCS protection. This is high risk investment product with 100% loss potential with no FSCS protection. Two totally different things at completely opposite ends of the risk scale.

DrSyn

andrikos wrote: »

Basset and Gold offer a 5 year fixed income bond at the fixed interest of 5.52% which receives a fixed amount of £230 per month direct into one's bank account, assuming an initial investment of £50k. As this seems to good to be true I proceeded to enquire whether at the end of the 5 year bond I will receive my initial investment intact, irrespective of the bond's performance and I was assured that this was indeed the case. Am I missing something in the small print as this is better than a fixed cash Isa the best of which these days offer an interest of less than 1.5%?

Using simple common sense.

The best 5 year bond covered by the FSCS protection is about 2%.

The FTSE 100 is currently paying a dividend of about 4%.
The FTSE is a risk investment, with 100 companies.

So if a single legitimate company is offering you 5.52% for 5 years, the risk must be higher than than the FTSE 100. So there must be risk to your money.

Remember : Its only only to good to be true, when you do not know or understand the risk!

Ifts

This 5 year Fixed Income Bond is offering you 5.52% because there is the risk that you may not get the capital back at the end of the term.
Also it has no FSCS protection.

You can compare it to Fixed Rate Savings Bonds rates here:

http://moneyfacts.co.uk/savings/fixed-rate-bonds/

If you click on 'Details' on any of the offerings you can see which ones are protected by the Financial Services Compensation Scheme.

jamesd

andrikos wrote: »

Am I missing something in the small print as this is better than a fixed cash Isa the best of which these days offer an interest of less than 1.5%?

This is an investment of a type that is not eligible for the usual FSCS protection so you have no FSCS protection at all. In a cash ISA you have FSCS protection for 100% of your saved money.

andrikos wrote: »

I proceeded to enquire whether at the end of the 5 year bond I will receive my initial investment intact, irrespective of the bond's performance and I was assured that this was indeed the case.

It's the case only if the underlying borrowing company can afford to repay. It if goes bust you're likely to get nothing at all back because this investment is near the bottom of the priority order for who gets paid out of any money that is left over.

andrikos wrote: »

this seems to good to be true

It isn't too good to be true. It's not very good at all compared to what else is around.

It's easy to get raw interest rates in the 10-12% range from peer to peer lending. For example, on Thursday this week at the P2P platform MoneyThing a loan (id AE591) with these general properties is becoming available:

12% interest rate
6 month term normally renewing every six months, so regular exits possible, just click to say if you want to stay in or leave.
Can try to sell at any time with no charge, usually plenty of buyers at the moment.
To a firm that provides hire purchase cars to higher risk borrowers, all cars have trackers installed.
Security in two parts:
1. the hire purchase payment stream is twice the value of the amount lent.
2. the loan is no more than 80% of the retail value of the cars.
Those are updated every month as the cars involved in each loan change.
And in addition:
3. so long as the borrower is still trading, they swap out completed and defaulted HP deals with new ones, absorbing any loss to the defaults.

There is also no FSCS protection for this but unlike the thing you're considering, the two items of security are in the form of a charge registered with Companies House so you are near to the top of the priority order for getting paid. What happens if the HP seller goes bust is that the charge is activated and you get the right to the payments and if a buyer defaults, you get the car they bought. Not literally you, but the P2P platform does and uses that to continue to pay you.

That's both considerably more secure and pays more than twice as much, with monthly payments. And there are many deals at MoneyThing, Ablrate and other P2P platforms so you can easily split your money over many different borrowers.

There's still no guarantee, of course: this is an investment and investments don't come with guarantees.

andrikos wrote: »

Am I missing something

Mostly you just don't know enough about the available alternative options and risks so you were at risk of buying something that was in part exploiting your lack of knowledge.

Flobberchops

msallen wrote: »

Its amazing how all these threads enquiring whether something is too good to be true are started by new posters. Its almost as though the scammers think that people will read a post questioning the legitimacy of their scam and decide to go for it anyway - unfortunately there probably are people that will.

Or possibly people are reading about finances online, have their interest piqued by something, and decide to turn to the website owned by "that nice Martin Lewis off the telly". Perhaps they use the Search function to investigate the name of a company or product, get no results, and so register and post on the forum, reasonably expecting some advice and guidance from the community of self-styled money saving experts.

But instead they get snarky and borderline paranoid accusations of shilling for scammers thrown at them. Oh well! Can't win 'em all.