50/50

jb007

The wifey in the Newcastle Building Society was trying to sell me a 50/50 balanced FTSE Bond, 50% in a a saving account for 12 Mths (7%) and 50% in a 5 yr tracker delivering 50% of any growth in the FTSE over 5yrs, with credit crunch closing in is this a wise or canny investment, anybody know?

Aegis

Ewww, steer clear!

Guaranteed Investment Bonds are basically a combination of a savings account and an investment product that have the worst of both world associated with them. You stand a very real chance of getting less than a good cash account in the 5 year term because of the lack of flexibility, and any growth that you DO get ignores such niceties as dividends and only pays you the increase in the raw FTSE index.

You'd almost certainly be better setting up a saving account and an investment portfolio separately. If you want to keep the same level of downside protection, all you really have to do is find a ratio that means that the savings portion will grow enough over 5 years to cover the loss of the entire investment portion. That way you get the full benefits of the investment and a decent savings product.

dunstonh

50% in a 5 yr tracker delivering 50% of any growth in the FTSE over 5yrs

Wow, that has to be one of the worst GEB deals for a long time.