With 2012 well underway, there is already a competitive range of plans available across a wide number of plan types, whether you are looking for traditional savings routes, investments with the potential for much higher returns or something in between.
To put these in perspective, we take a look at the Top 10 most popular plans in 2011 and get an insight into why each proved so popular.
Scottish Widows Bank holds the top slot with their highly competitive 5 year fixed rate bond. Since mid October the rate has been 4.6% which has kept it right at the forefront of the longer term savings rates.
For those who understand the effects of inflation but do not wish to risk linking their returns to an index, this is the next best option and gives peace of mind that the rate will stay unchanged for the full term. The bond also has annual, quarterly or monthly payment options and since Scottish Widows Bank has its own banking licence, there is no overlap with the Lloyds Group when it comes to FSCS protection (up to £85,000 per individual). Please click on the link for more information about the Scottish Widows fixed rate bond »
Since there are not many options available which offer the opportunity to receive over 7% income, it is easy to see why this Investec plan has proved so popular. The plan pays 6.75% per annum whatever happens, as well as a 0.5% bonus every year the FTSE finishes higher than its starting value. There is also a monthly option and it is available directly or through an ISA and will accept ISA transfers. Please click on the link for more information about the Investec Bonus Income Plan »
Kick Out plans were the real story of 2011 with a huge surge of interest that continues to grow. This plan from Investec was the star performer in the category, offering the potential for consistently high returns which culminated at the end of the year with the highest rate ever launched from this type of plan linked to the FTSE, paying 13.5% per year. This rate is still available and accepts direct investments, ISAs and ISA transfers. Please click on the link for more information about the Investec Enhanced Kick Out Plan »
Investec has become a trusted brand with savers as well as investors, evidenced here by their third entry in the Top 5. This plan has proved very popular with those looking for higher returns than are available from fixed rate bonds.
With a potential return of 19% at the end of the three year term, this plan could therefore provide you with almost 6% per year compound whilst most 3 year fixed rate bonds are only offering around 4%. Inflation concerns have been high on the agenda for many who have looked to this plan and with capital protection and FSCS eligibility, it really does deserve its place. Please click on the link for more information about the Investec 3 Year Deposit Plan »
This is the second fixed rate bond alternative to feature in the Top 5 and offers capital protection along with the potential to receive a far higher level of income than is available from a fixed rate bond of equivalent length.
The rates have varied between 7% and 8% per annum with the FTSE having to remain between a lower and upper limit for the year (4,250 and 7,250) in order to receive the income payment. With a quarterly payment option and full capital protection provided by the Royal Bank of Scotland, this plan puts up a real challenge to persistent low interest rates and high inflation. Please click on the link for more information about the Meteor Income Deposit Plan »
There was no surprise that this plan made it comfortably into the Top 10 and since this was a new market entrant only featuring towards the end of the year, it certainly had the potential to rank far higher.
The plan offers a return linked to the Retail Price Index (currently 5.2%), which historically has been higher than the usually quoted Consumer Price Index. With concerns over what might happen to inflation, particularly in the medium to long term, this plan has much to offer including full capital protection and the safety net of a minimum fixed return. Most savers have utilised the plan for Cash ISAs and Cash ISA transfers but it will also accept direct investments. Please click on the link for more information about the Legal & General Inflation Protected Deposit Bond »
Apart from offering full capital protection, the main attraction of this plan is the return since it offers 100% of any rise in the FTSE over the investment term, capped at 50%. There is the safety net of a minimum fixed return and the plan accepts direct investments, Cash ISA and Cash ISA transfers. Please click on the link for more information about the Legal & General 6 Year Growth Deposit Bond »
It is easy to see why this plan is featured in the Top 10 with a headline rate of 8.25% and full capital protection provided by the Royal Bank of Scotland. The reason for the high return is that the plan is based on the level of five FTSE 100 shares rather than the FTSE 100 Index itself. Provided these shares meet the required level (which reduces each year) at the end of each year, the plan will pay out 8.25% for every year the plan has been in place. Please click on the link for more information about the Gilliat Deposit Kick Out Plan »
This plan was one of the most consistent performers throughout the year and is the only plan which offers a return even if the FTSE falls - a fixed return of 60% awaits the investor, even if the FTSE falls by up to 20%. This plan was recently renamed the Booster Plan since it included a more favourable treatment of capital, providing an overall positive return even if the FTSE falls by up to 50%. Please click on the link for more information about the Morgan Stanley Booster Plan »
The last place in our Top 10 was taken by Gilliat’s Income Builder which offers the potential for up to 8.2% per annum. Income is accrued for each week the FTSE is above 3,000 and is paid out every quarter. Capital is at risk only if the FTSE falls below this same level. With most funds offering a yield far lower and putting your capital at risk to a potentially greater degree, it is easy to see why income seekers have turned to this plan. Please click on the link for more information about the Gilliat income Builder »
From strength to strength
So there is our Top 10 for 2011, a wide range of savings and investment plans as well as a mixture of the two. With inflation being a main concern for both savers and investors, it is clear to see why plans that offer capital protection but with the potential for higher returns than those available from fixed rate bonds have proved so popular, taking five of the positions.
What is also clear is that there will be more of the same this year. Current highlights are a continuation of Scottish Widows’ 4.6% five year fixed rate bond, another launch of the Legal & General RPI plan, a 13.5% Investec Kick Out Plan, 7.25% Investec Bonus Income Plan and 7.5% potential income plus capital protection from Meteor. Investec also continues to dominate in the shorter term with the potential for 19% over 3 years, capital protected.
With the current economic climate not offering much, it is good to see such a range of options and I have a feeling there may be even better rates to come so keep checking our website for the latest plans available.
No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.
Some structured investment plans are not capital protected and there may be the risk of losing some or all of your initial investment. There is also a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated, in which case you may not be entitled to compensation from the Financial Services Compensation Scheme (FSCS). In addition, you may not get back the full amount invested if the plan is not held for the full term. The past performance of the FTSE 100 Index is not a guide to its future performance.
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