8% Savings

arsenepenguin

Hi Forum
Can somebody help me out. London Capital & Finance are offering 8% on a fixed three year bond.
Where's the catch.

[Deleted User]

arsenepenguin wrote: »

Where's the catch.

Did you look at their website?

Investors should note that repayment of the bonds offered by London Capital & Finance Plc, and the payment of interest on the bonds, depends on the performance of loans made by London Capital & Finance Plc to various small and medium-sized enterprises. In the event that these borrowers default on the loans, investors may lose some or all of their investment. Investment in the bonds of London Capital & Finance Plc is therefore speculative and involves a degree of risk.

ColdIron

Discussed at length every few days
http://forums.moneysavingexpert.com/search.php?searchid=170999255
Bottom line, it's not what you think and you could lose all your cash

Aretnap

No FSCS protection. You could lose some or all of your money. An interest rate of 8% implies that there is a significant risk of default.

Do you understand their business model? Do you know what type of companies they are lending to? Do you know what type of assets their securities are "backed" with, and how well will those assets hold their value in a downturn? If you can't answer "yes" to those questions then you probably shouldn't be investing with them - or at least you shouldn't be investing more than a small proportion of your total wealth.

george4064

Avoid.......

dunstonh

arsenepenguin wrote: »

Hi Forum
Can somebody help me out. London Capital & Finance are offering 8% on a fixed three year bond.
Where's the catch.

There is no catch. It is exactly what it is meant to be.

The issue isnt that there is a catch. The issue is that it is not what you think it is. The same issue that gets posted several times a week in this section and gets the identical answers every single time. Indeed, the second search result on google for this bond is MSE listing several threads with virtually the same question you have asked and the same people answering the same way every single time.

jimjames

It's scary how many people seem to think this is a savings product. Whether it's deliberate by London and Capital I don't know but I'm guessing only a tiny proportion of potential investors are posting here and in a couple of years we could have a serious number of people who are crying foul at the loss of their money.

TrustyOven

My mother emailed me a link to this company earlier this year, I had to discourage her from looking at it further, given the information on the MSE forums about this company.

Have they had some sort of TV / newspaper / internet advertising campaign aimed at those that don't understand finance?

Malthusian

TrustyOven wrote: »

Have they had some sort of TV / newspaper / internet advertising campaign aimed at those that don't understand finance?

They buy the top results on Google for "best savings rates" or similar.

seacaitch

What's interesting is that many people's financial knowledge is so low that they can't really tell that this isn't a savings deposit account.

I realise it's due partly/largely to the historic misappropriation of the word 'bond' by the deposit takers, so that a product that in this case really is a type of bond is erroneously assumed by many to be a deposit account, but still....

At least we see (some) people recognising that the high coupon rate suggests something is different about this offering compared to the deposit accounts they're also looking at, but it's disappointing that, despite them being alerted by this great big red flag, they're still unable to twig themselves that this is a wholly different type of product that's almost certainly totally inappropriate for them.

veryintrigued

Check back here in two years when theres an article on here and a push for compensation!