The unexpected increase to the headline rate of inflation earlier this month, is another reminder of just how important it is to get the most from our capital.
The FTSE Monthly Contingent Income Plan from Meteor offers a potential 0.5% interest each month, which is paid provided the FTSE 100 Index has not fallen more than 25% below its level of the start of the plan – that’s the potential for 6.0% interest per year. If the Index does close below this level, no interest is paid for that month.
The plan has a maximum term of 10 years, but also offers the opportunity to receive your initial capital back in full before then if the FTSE has risen 5% or more at the end of each quarter (from year 2 onwards). If the plan does not end early, your initial capital is returned in full provided the FTSE has not fallen by more than 40% at the end of the plan term. If it has fallen below this level, your capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.
If the plan pays out, the 0.5% per month is over double the best lonng term fixed rate available from cash at the moment. So if you’re reasonably confident the FTSE will not drop by 25% or more, this plan could offer an attractive mix of high interest and some capital protection against a falling stock market.
Capital is at risk. This is a structured investment plan that is not capital protected and is not covered by the Financial Services Compensation Scheme (FSCS) for default alone. Income payments are not guaranteed and there is a risk of losing some or all of your initial investment due to the performance of the FTSE 100 Index.
There is 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 addition, you may not get back the full amount of your initial investment 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.
Tax treatment of ISAs depends on your individual circumstances and legislation which are subject to change in the future. ISA transfer charges may apply, please check with your provider.
Fair Investment Company does not offer advice and any investment transacted through us is on a non-advised basis. If you are at all unsure of the suitability of this type of investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.