Castle Trust

Dramaqueen33

Morning All,

I have a little money I am looking to put into a fixed term bond. I have heard Martin Lewis mention Paragon Bank on one of his TV shows, however after a quick google search Castle Trust have come up with higher interest rates - 2.25% on a 1 year fixed term!

Has anyone had any experience with Castle Trust? I'm a bit wary as they seem to be new to the scene...

Many thanks in advance
DQ

AnotherJoe

From their website;

Are there any risks associated with investing in a Fortress Bond?
You risk losing capital should Castle Trust become insolvent.



You wont find Paragon bank or similar making that statement. It also says in the jargon that its a "loan note" So AIUI this is not the same as what Paragon Bank and similar do. In one case the bank invests on your behalf in the other you invest in the organization (Castle) itself by loaning them money which they promise to pay back.


Personally, though IANAL, i find companies like this sailing very close to the wind when they mention FCSC protection.

They do say this (my bold)


If you are eligible for FSCS protection, the FSCS may pay compensation on your investment, up to a maximum of £50,000 per person. If you invest as a joint account and both individuals are eligible under the FSCS, you can claim up to a maximum of £100,000. A higher limit of £85,000 applies in relation to firms offering deposits such as banks and building societies, but Fortress Bonds and Housas* are not deposits.

cloud_dog

Dramaqueen33 wrote: »

Morning All,

I have a little money I am looking to put into a fixed term bond. I have heard Martin Lewis mention Paragon Bank on one of his TV shows, however after a quick google search Castle Trust have come up with higher interest rates - 2.25% on a 1 year fixed term!

Has anyone had any experience with Castle Trust? I'm a bit wary as they seem to be new to the scene...

Many thanks in advance
DQ

You are not comparing like-with-like. This is one of these 'mini bonds' which are basically a loan running the risk of losing all your capital.

dunstonh

Castle Trust offer a number of 100% loss of capital loan notes which they say have FSCS protection but most feel they are not FSCS protected. Loan notes do not normally get FSCS protection as they are not retail financial products but direct investments. It is not uncommon for some investments to claim FSCS protection but later find that it did not qualify.

Basically, Castle Trust think they have found a loophole that allows them to get FSCS protection. However, no other loan note is using that method. There is a pretty good explanation at https://bondreview.co.uk/2018/01/26/castle-trust-corporate-loan-notes-covered-by-the-fscs/

Dramaqueen33

Thank you so much for your responses. Although I am new to this (inheritance money rather than clever money manifesting portfolios!) I did think that their interest rates could be too good to be safe!

I saw their disclaimer but then read the FCSC info and thought I better ask for some extra input!

So these are actually different types of investments/savings accounts and yes I see I'm not really comparing like for like.

I am at this stage rather risk adverse so will perhaps go for another option!

Thanks again!

DQ

cloud_dog

In today's world of low interest rates you will need to take some risks in order to get a return that will, at the very least, match inflation.

Failing that it is simply looking at the best interest rates on savings accounts, or going down the route of looking to utilise current accounts which offer higher interest rates up to certain limits etc.

It all depends on how much you have to 'manage'. At its simplest level (and I'm not saying this is the absolute best option, re current accounts) but instant access accounts can be had for 1.3%, one year fixed rate 1.8% (ish).

Remember more risk potentially more reward. So we are now in to the realms of investments and where you may be on that scale.

The amount in question is pertinent and also your current financial situation (mortgage, pension(s), debt, plans, etc, etc).

jimjames

If it's a "little money" you can blow the Castle Trust rates out of the water by using current accounts and regular savers which pay up to 5% risk free

Reaper

As Dunstonh's links says the rates on offer are very low for an investment product where your money is at risk.

A cynical person would say that Castle Trust’s rates appear to be calculated more to appear just slightly better than an equivalent deposit account

By all means invest as well as save as long as you realise that is what you are doing, but get better rates then are on offer here in exchange for the risk.