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fireboy
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Joined: 18 Oct 2004
Posts: 134
Cash Points ££ 459.94
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 Posted: Fri Feb 25, 2005 5:26 pm Post subject: Post Office Guaranteed Equity Bond - FTSE 110% of any Gain |
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The Guaranteed Equity Bond is a Fixed Term deposit account that gives you the chance to benefit from a percentage of the growth potential linked to the performance of the FTSE 100 index, whilst your original deposit remains secure.
Details off the website -
How it works
Here’s how Post Office™ Guaranteed Equity Bonds work
Your money is not directly invested in the stock market, but is linked to a percentage of the performance of the FTSE 100 Index, adjusted by an averaging method. As a result of this you are not entitled to any dividends arising from shares within the index and these dividends are not reinvested.
If the market does well, so does the Bond
If the market performs poorly, you may earn no interest
But you'll never lose the original amount you invested
Your step by step guide to Guaranteed Equity Bonds
You choose the amount you wish to invest – from £500 and £1,000,000
You also choose the length of the investment, either three or five years
The Three Year Bond gives you 75% of any growth in the FTSE 100 Index, adjusted by an averaging method
The Five Year Bond gives you 110% of any growth in the FTSE 100 Index, adjusted by an averaging method
The Guaranteed Equity Bonds are a limited offer product, which means the closing date for investment in this issue is 4th April 2005 – or sooner if they become fully subscribed
The Post Office™ Guaranteed Equity Bond is a fixed term deposit account which is linked to a percentage of the performance of the FTSE 100 Index, adjusted by an averaging method
From the day your funds clear until the date the Bond opens, your investment will earn a 4.5% Gross* / AER† fixed rate (this interest is added onto the original amount of cash invested in your Guaranteed Equity Bond)
On 22nd April 2005 the first FTSE 100 Index reading is taken. This is Index Level 1
The second reading (or Index Level 2) is created by taking the average of several readings over the last months of your Bond’s investment period. With the Three Year Bond, we take an average of seven readings taken over the last six months of the investment. For the Five Year Bond, we take the average made of 13 readings taken over the last 12 months of the Bond's Fixed Term
The percentage of growth between Index Level 1 and Index Level 2 is used to calculate your Bond’s earnings. You will receive 75% or 110% of any growth depending on the term of your Bond
Even if the FTSE 100 Index falls over the period, you’ll still get back every penny of the amount you originally invested – plus the interest it earned during the offer period. Please bear in mind that its value could be eroded by the effects of inflation
How to tell if a Guaranteed Equity Bond from the Post Office™ is right for you
The Post Office™ Guaranteed Equity Bond won’t suit everyone. So, before you invest, we’ve pointed out a few things you should consider before applying.
Yes, it could be right for me because I:
want to share in any FTSE 100 growth over 3 or 5 years
am looking for stock market linked growth potential
want to know that my original investment is secure
have a minimum lump sum of £500 to invest
won’t need to touch my investment for 3 to 5 years (remember, you may need some spare cash for emergencies).
No, it probably isn’t right for me because I:
like to top up my savings regularly
want regular income from my money
may need to get to my money during the 3 or 5 year period
haven’t any spare cash for unexpected emergencies
want a guaranteed rate of return
What to expect
Have a look at the returns you could enjoy
The following tables are a guide only for the type of return you could receive at maturity with a Post Office™ Guaranteed Equity Bond
Three Year Guaranteed Equity Bond
Your initial investment Averaged increase in FTSE 100 Index over 3 years 75% participation Your initial investment plus gross interest*
£10,000 -25% 0% £10,000
£10,000 +5% 3.75% £10,375
£10,000 +20% 15% £11,500
£10,000 +50% 37.5% £13,750
Five Year Guaranteed Equity Bond
Your initial investment Averaged increase in FTSE 100 Index over 5 years 110% participation Your initial investment plus gross interest*
£10,000 -25% 0% £10,000
£10,000 +5% 5.5% £10,550
£10,000 +20% 22% £12,200
£10,000 +50% 55% £15,500
The above tables are intended as guides for reference purposes.
They are not representations of the exact returns you may receive and do not take into account deductions of income tax or the effect of inflation.
Here’s how we work out your returns
To calculate the growth, first we take the level of the FTSE 100 Index when the Bond opens on the 22nd April 2005. This is called Index Level 1.
Then we work out the average FTSE 100 Index level towards the end of the Bond period. We take the average from 7 readings over the last 6 months for the 3 Year Guaranteed Equity Bond, and an average from 13 readings over the last 12 months for the 5 Year Guaranteed Equity Bond. This is Index level 2.
The difference between the two index levels is the amount of growth achieved
Choose a Five Year Guaranteed Equity Bond and you’ll receive 110% of any growth
Pick a Three Year Bond and you’ll get 75% of any growth
Averaging will give you a different Index level 2 figure compared to an Index reading taken on a single Index reading day. One effect of averaging in a rising market is likely to be to constrain the find level of the Index used to calculate benefits.
http://www.postoffice.co.uk/portal/po/jump2?catId=500110&mediaId=14500200 |
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Neo
Saving Enthusiast
Joined: 24 Oct 2004
Posts: 147
Cash Points ££ 595.04
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| Posted: Mon Feb 28, 2005 1:02 am Post subject: |
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The price you pay for the capital protection is loss of income from dividends which at say 4% amounts to 12-15% on the 3 year and 10-15% on the 5 year (adjusted for the 110% gain).
Still it is far superior to the precipice junk that used to be sold by IFA's such as Aaron partnership.
It looks a good investment for the 5 year term, more so than the 3 year term which only pays 75% of any gain ?
I am definetly going to look into this to see if its worth throwing 2-5 grand into it for the term, will post back later if I see anything strange. |
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