EGG 5 Year Garunteed bond?

motiv4

http://new.egg.com/visitor/0,,3_101420--View_2141,00.html

Any view on this product? surly there is some sort of catch... even if the ftse 100 is 1% above where it is when u buy in 5 years u get back 45%?

too good to be true?

dunstonh

Compare it to the premier issue 37 which is 16% after year 1 (increasing annually by 16%) so if it did get to year five and was 1 point higher, it would pay out 80% compared to Egg's 45%

Whilst the closing date for the Premier one is effectively today, the new launch should follow and 15% is the expected annual equiv and that is still 75% compared to Eggs 45%

motiv4

are there any downsides to this investment? or alternatives?
premier 37 has a condition where if FTSE falls by 50% or more u can loose out, but the EGG one doesnt have any terms like that

Lokolo

Yes it does, the FTSE has the gain, if it doesn't you don't get any money

meester

They are ignoring compounding in an attempt to confuse. A 45% growth in 5 years is equivalent to 7.7% per year. While this is slightly better than a savings account, it is dependent on the FTSE being higher in five years time. If it isn't, you get 0%.Therefore the real return is probably no better than a savings account, but with less certainty. It does not seem worth the effort.

Lokolo

I think that would be quite happy if in 5 years time the FTSE hasn't grown one bit, the amount of free money they would have gained!

motiv4

meester wrote: »

They are ignoring compounding in an attempt to confuse. A 45% growth in 5 years is equivalent to 7.7% per year. While this is slightly better than a savings account, it is dependent on the FTSE being higher in five years time. If it isn't, you get 0%.Therefore the real return is probably no better than a savings account, but with less certainty. It does not seem worth the effort.

Thanks this helped a lot. i always seem to get carried away when i see big numbers like 45% etc etc.
The premier one looks like a much better deal i think i will look into that in more detail

meester

motiv4 wrote: »

Thanks this helped a lot. i always seem to get carried away when i see big numbers like 45% etc etc.
The premier one looks like a much better deal i think i will look into that in more detail

The premier account may still be available. If you call them they will advise. I just received a call from them because my cheque for £20k had gone missing in the post, and they said it was ok to send it in up to Monday. But they have got my application already.

Nomad25

I'm a dodo about these things. But, in describing the benefits they use "if" re FTSE performance more than once. Just my suspicious mind!