ISAs linked to the various indices

[Four Cofffee]

With ISA rates falling I have been looking at some of the ISA's being offered which guarantee a 14% return over 5 years, but which also then offer a % of the Halifax House Price Index ( 75%) or the FTSE (50%).

I recall we had a debate about such investments a while ago and there was a logical reason why they were not very attractive once you got below the surface. I recognise that 14% over 5 years is only about 2% a year guranteed and you can get better elsewhere by tying up money for 5 years but it all depends on where we see the house price index and the FTSE in 5 years????

[sidicks]

haworthlloyd1 said:

Four Cofffee said:

With ISA rates falling I have been looking at some of the ISA's being offered which guarantee a 14% return over 5 years, but which also then offer a % of the Halifax House Price Index ( 75%) or the FTSE (50%).

I recall we had a debate about such investments a while ago and there was a logical reason why they were not very attractive once you got below the surface. I recognise that 14% over 5 years is only about 2% a year guranteed and you can get better elsewhere by tying up money for 5 years but it all depends on where we see the house price index and the FTSE in 5 years????

half the growth in the FTSE over 5 years would mean that to get a 50% return the ftse would need to be near 10,000 in 5 years time. Can you honestly see that? The 50% return would work out about 8% a year ish wouldn't it?

guaranteed products are a big money spinner for investment companies - you either want to invest (and take the risk and potential profits) or don't invest imho.

Surely the OP has simply said that the payoff in 5 years is a percentage of the increase in FTSE or House Price Index, so that if the FTSE returns 30% over 5 years, which is quite plausible, the ISA will return 15%. If the FTSE returns 50% over 5 years then the payoff on the ISA will be 25% etc.

With a minimum 14% return i.e around 2.7% p.a.

Sounds an ok proposition to me.

Sidicks

Sidicks

Edited by sidicks on Tuesday 8th September 13:53

[Four Cofffee]

haworthlloyd1 said:

Four Cofffee said:

With ISA rates falling I have been looking at some of the ISA's being offered which guarantee a 14% return over 5 years, but which also then offer a % of the Halifax House Price Index ( 75%) or the FTSE (50%).

I recall we had a debate about such investments a while ago and there was a logical reason why they were not very attractive once you got below the surface. I recognise that 14% over 5 years is only about 2% a year guranteed and you can get better elsewhere by tying up money for 5 years but it all depends on where we see the house price index and the FTSE in 5 years????

is your money already in a cash isa or equity isa.

if in equities already you won't be able to move it all to a cash isa anyway.

Reading the leaflets they have three options, all with a gurantee of getting your money back:

1. Invest and get 14% over 5 years guranteed, and if the FTSE goes up BY A SINGLE POINT by 2015 get 40% more than you put in.

2. Invest aand get 14% and 75% of the % increase in the Halifax property index.

3. Invest and if the FTSE goes up BY A SINGLE POINT by 2015 get 40% more than you put in.

I notice the projections ignore the 14%, so really your 40% or 75% is minus the 14% you would have got anyway asthat is a 'minimum'.


Hadn't thought about the cash/equity think but they are offering to transfer in 4 or 5 years of cash Isa's.

[sidicks]

[quote=haworthlloyd1
each to their own though mate - I know how these things work and have studied them mathematically speaking and the only person making money is the provider

[/quote]

Trust me - I used to price these things, so I know how they work too!! I'm just saying they aren't always bad value - minimum downside with equity participation could be attractive, depending on your expectations for groth over the next 5 years!
:-)
Sidicks

[Four Cofffee]

haworthlloyd1 said:

Four Cofffee said:

haworthlloyd1 said:

Four Cofffee said:

With ISA rates falling I have been looking at some of the ISA's being offered which guarantee a 14% return over 5 years, but which also then offer a % of the Halifax House Price Index ( 75%) or the FTSE (50%).

I recall we had a debate about such investments a while ago and there was a logical reason why they were not very attractive once you got below the surface. I recognise that 14% over 5 years is only about 2% a year guranteed and you can get better elsewhere by tying up money for 5 years but it all depends on where we see the house price index and the FTSE in 5 years????

is your money already in a cash isa or equity isa.

if in equities already you won't be able to move it all to a cash isa anyway.

Reading the leaflets they have three options, all with a gurantee of getting your money back:

1. Invest and get 14% over 5 years guranteed, and if the FTSE goes up BY A SINGLE POINT by 2015 get 40% more than you put in.

2. Invest aand get 14% and 75% of the % increase in the Halifax property index.

3. Invest and if the FTSE goes up BY A SINGLE POINT by 2015 get 40% more than you put in.

I notice the projections ignore the 14%, so really your 40% or 75% is minus the 14% you would have got anyway asthat is a 'minimum'.


Hadn't thought about the cash/equity think but they are offering to transfer in 4 or 5 years of cash Isa's.

number one sounds quite good.

I got confused. The capital Plus one is only a 0.5% guranteed return and then if the FTSE goes up by a point (average across the last 6 months of the deal)you get 40% more. So £10K would be £14K if the FTSE goes up by more than a point and £10050 if it drops. The other two do gurantee 14% but that is included in the 75% or 40% overall.

I am a bit concerned that these must be equity based ISAs and they are offering to transfer my cash isas but I guess if they are not actually using my money for ISA but to lend out and then taking the risk then they may be OK??

[Four Cofffee]

I am thinking the money is better invested buying my Elise from the company and sitting on the rest of the cash. It all seems a bit of smoke and mirors on their part. It isn't Abbey but part of their group bassed around a confederation of an East Midlands city