New Post Office Geb 125%

H2SO4

Just seen an ad in the Telegraph about new Post Office GEB issue.

It pays 125% of growth over 5yrs or 75% over 3, with the former being as good as the newly-closed ns&i GEB. Like all GEBs the money is guarranteed. Can anyone investigate it further?

dunstonh

Not bothering to investigate it further.

1 - better % are available elsewhere.
2 - better ways to invest are available.

ReportInvestor

What gives a higher percentage of the FTSE growth, dh? The usual complaint against NSI is that it unfairly outdoes other similar products.

Like dh, I'm not a fan of these products given the importance of dividends. If the market goes nowhere you will probably miss out on up to 20% of your original investment individends.

Which is a possible 20% cushion against market falls without needing to pay for protection.

Another issue with this product is that the growth is subject to income tax (at 40% if you are a top rate taxpayer). The vast majority can usually use their capital gains tax allowance to avoid tax on capital gains / FTSE growth.

But GEBs do help some people to sleep at night. Just make sure you choose the right one for you if you are one of those people.

dunstonh

A 130% one came through my mail the other day. I think from memory it was a 7 year one.

I didnt take much notice of it so cant give specifics. After all, the last GEB I sold was in 1997 so its not something I keep a close eye on. I have done a few checks for people on this board in the past but when you look at the breakdown of GEBs, they just are not good value for money.

ReportInvestor

To H2SO4

The NSI 10th issue GEB has just closed its doors
"Further issues will be available later in the year."

Those who took out an earlier GEB with NSI in February 2005 only got 110% of the FTSE increase
So they aren't predictable if you are thinking of waiting on NSI.

L&G had a 130% FTSE product over 6 years - Accelerated Growth Investment Plan 2
Perhaps dh was thinking of this?

It doesn't do quite what its target audience might like. In immortal words that only our Insurance Industry or a politican could conjure up:

"Capital is protected but not guaranteed :mad: " - So what's the point if it's peace of mind you want? But this one has also shut up shop as it ran for 7 weeks from May 15.

But now there's a 150% offer from the West Bromwich BS called the FTSE Booster Guaranteed Capital Account

"......Set to launch this weekend, the investment plan offers 150% of any growth in the FTSE 100 index (subject to averaging) over its 6-year term, plus a 100% guaranteed return of your capital.

The investment term runs from September 13th 2005 to September 13th 2011 - no additional deposits or withdrawals being permitted during this time. The plan also contains a mini cash ISA option.

Meanwhile, funds held during the offer period will earn interest at 4.75% gross p.a. (pro rata) and will be added to the bond on September 13th 2005.

Minimum investment is £3,000."

H2SO4

1. It's a Post Office one, not ns&i
2. I've done some calculations:

With an average savings account rate of 4% AER over 5 years, the FTSE would have to rise 16.24% to beat it, or more if there are any tax rises.

quinlanmd

The West Brom GEB looks good for this type of product.
Shame that, for some bizarre reason, Tessa ISA investments are not allowed when mini cash ISA investments are allowed.

dunstonh

H2SO4 wrote:

1. It's a Post Office one, not ns&i
2. I've done some calculations:

With an average savings account rate of 4% AER over 5 years, the FTSE would have to rise 16.24% to beat it, or more if there are any tax rises.

Thats not a lot is it. I put a portfolio together for someone just over 2 weeks ago and it is 5.83% up already. And thats with a portfolio that is cautious to balanced in its weighting. Unlike a FTSE tracker which is balanced to adventurous.

With analysts putting 8% p.a. on UK with a little more on globals over the next few years, it doesnt seem to bad. Add in the dividends (not on GEBs) and it seems a lot better.

ReportInvestor

dunstonh wrote:

[FTSE 100 up 16.4% in 4 years] is not a lot is it. I put a portfolio together for someone just over 2 weeks ago and it is 5.83% up already. And thats with a portfolio that is cautious to balanced in its weighting.... Add in the dividends and it seems a lot better.

Sounds good :T . Your client must be delighted.

Might similar reasoning be applied to income drawdown pensions, which are, after all, only a post retirement investment wrapper in the cautious/balanced strata of investments?

Good to hear the positives about UK equities (8% expected in the next few years) and global equities (even better) .

dunstonh

Sounds good :T . Your client must be delighted.

We all know its a bit of luck when that happens. It is still rather nice when it does though

Might similar reasoning be applied to income drawdown pensions, which are, after all, only a post retirement investment wrapper in the cautious/balanced strata of investments?

No-one argues how a portfolio should be made up. However, its the failure to correctly postion the amount of risk involved that causes all the posts.