Shepherd's friendly 5yr fixed 2.85%

JetsetWilly

Looking around and this bond cropped up today but doesnt seem to be being pushed anywhere so I'm starting to have doubts whether it's the real deal?
It's a 5yr fixed rate of 2.85%.
They seem to be fscs but the lack of no-one pushing it worries me a little. It's way more than anyone else is offering for 5yrs.
Anyone any thoughts?

solartom

it is not a savings bond it is a life insurance policy
a quick read of key info will tell you as well as what you would get back
which is not the sort of return i would expect from a savings bond
which this one is not

DrSyn

1. solartom is correct it is a Life insurance policy.

https://shepherdsfriendly.blob.core.windows.net/pdf-media/SF_5_YEAR_FIXED_RATE_BOND_KID.v1.pdf


2. There is such a Friendly Society on the FCA register:-

https://register.fca.org.uk/ShPo_FirmDetailsPage?id=001b000000MfFaXAAV


3. If you are looking for 5year fixed bonds have you looked here?

https://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html


4, Gatehouse Bank is Paying 2.75%

https://www.gatehousebank.com/personal/savings

londoninvestor

How exactly does the FSCS protection work on insurance policies? It's "100%", but is that just the premium and not the accrued 'guaranteed' return?

quirkydeptless

"Your premiums are invested in a pooled with profits fund which is invested in a mix of equities, Government gilts, corporate bonds,
property and cash. This spread of assets allows us to pay policy benefits such as a return of your lump sum and guaranteed growth at
the end of the term of your product."


So it's an investment product

londoninvestor

quirkydeptless wrote: »

"Your premiums are invested in a pooled with profits fund which is invested in a mix of equities, Government gilts, corporate bonds,
property and cash. This spread of assets allows us to pay policy benefits such as a return of your lump sum and guaranteed growth at
the end of the term of your product."


So it's an investment product

But contractually the return is fixed - any shortfall in the fund that Shepherds choose to invest your premium in has to be absorbed by Shepherds (and conversely they get any upside of the actual return of the investment over and above what they owe to you).

Default risk is what you have to be concerned about, so the detail of the FSCS protection is important.

drphila

londoninvestor wrote: »

How exactly does the FSCS protection work on insurance policies? It's "100%", but is that just the premium and not the accrued 'guaranteed' return?

What is significant here is that the interest is paid at the end so that no interest will be covered until the 5 yr anniversary (unlike conventional savings bonds where interest is added yearly or monthly).


The annual rate is now 2.75% the same as Gatehouse. Gatehouse though is 'expected interest' and though these Sharia accounts have always paid out in the past I'm not sure I definitely trust them to pay out after 5 yrs if market conditions become very tough.

masonic

londoninvestor wrote: »

Default risk is what you have to be concerned about, so the detail of the FSCS protection is important.

FSCS protection is always based on what the firm would be obliged to provide you.

In the event the Shepherd's Friendly was declared insolvent prior to your 5 year holding period and you cashed in the policy, then you'd receive 100% of the capital - in line with the "capital protection for your investment throughout the term".

In the event they were declared insolvent on or after your 5 year anniversary date (but before repaying you), you'd receive capital and interest in line with their obligation to give you a "guaranteed level of growth if you leave your policy invested for five years".

It is possible the FSCS would permit you to hold the account to term to receive the interest in line with the T&Cs (there is precedent for this).

masonic

drphila wrote: »

The annual rate is now 2.75% the same as Gatehouse. Gatehouse though is 'expected interest' and though these Sharia accounts have always paid out in the past I'm not sure I definitely trust them to pay out after 5 yrs if market conditions become very tough.

In tough conditions, they could change the rate and give you the option to withdraw penalty free. They are obliged to pay out any profit/interest accrued to that date and this is covered by the FSCS if they were unable to pay the accrued profit/interest.