9.01% fixed rate 5 year high yield bond - too good to be true?

steviewander

Has anybody come across or invested in this product. It looks too good to be true. They claim a 45.04% return On a 5 year compounding high yield bond:

https://www.bassetgold.co.uk/bond/5-year-compounding-high-yield-bond

ColdIron

It's not a cash account if that's what you thought, it's a high risk investment product and with no FSCS protection there is the potential for 100% loss

https://forums.moneysavingexpert.com/discussion/comment/71652917#Comment_71652917

eskbanker

Did you read down to the bottom of the page, where the risk warning highlights that your capital is at risk?

Zanderman

- too good to be true?

Yes, it's too good to be true.

Unless you want to risk your money.

Malthusian

Zanderman wrote: »

Yes, it's too good to be true.

Unless you want to risk your money.

And if you want to risk your money it's true but not good, as rates of 9% can be obtained from pick-your-own P2P platforms with significantly more transparency, liquidity and diversification. (Note that the key word is "more" - these platforms are still very high risk, and the main advantage is being able to diversify across lots of Basset & Golds, rather than the underlying borrowers being intrinsically any better than Basset & Gold.)

A higher-risk equity-heavy diversified portfolio would likely have returned more than 9% over the last five years, with significantly less risk of permanent losses (the forum favourite Vanguard Lifestrategy 80/20 returned 10.81%). What it would return in the next five is of course anyone's guess.

dunstonh

It looks too good to be true.

It is true. It does exactly what it says it does.

It is also true that it is an unregulated investment instrument (not a retail financial investment). It has no FSCS protection and is capable of 100% loss.

Very broadly, you can look at the yield and consider that close to the expected failure rate. So, a 1 in 10 chance of losing all your money.

As it is not a retail financial product, it should not be marketed to retail consumers. However, like many of these types of bonds, they are doing exactly that. Things like having reviews published on the website. I wonder if those 5 star reviews would say the same when a loss event occurs. And reading some, its clear that a number of them don't have a clue about the high risk they are taking.

A general guide is that people should not invest more than 5% of their investible wealth into high-risk unregulated investments and only if they are prepared to accept total loss on that.

pearl123

Without a doubt too good to be true.

Ray_Singh-Blue

Too true to be good?

longleggedhair

Company only established in July last year. Don't touch it with somebody else's barge pole!

Reaper

longleggedhair wrote: »

Company only established in July last year.

... which makes it hard to explain a review they quote on their web site saying

Peter Lines
"Been with a couple of years, good, professional, good contact, personnel touch will ring and inform you of any new products you may or may not want to take up.

talexuser

There should be a forum rule that as soon as someone asks "is this too good to be true" the automatic answer is YES.