Potential high growth returns and capital protection, even in a falling market…
With low longer term fixed rates forcing some savers to consider a wider range of options, the combination of capital protection plus the potential for a high growth return could be a compelling opportunity.
The re-launched Defensive Deposit Plan from Investec offers a fixed return of 25% provided the FTSE 100 Index at the end of the six year term is higher than 75% of its value at the start of the plan (subject to averaging). So the FTSE can fall up to 25% and you still receive the fixed return. However, if the Index is lower, you will only receive a return of your original capital.
The best long term fixed rate savings bonds are paying around 2.50% AER whilst by linking your deposit to the FTSE, if this Deposit pays out the 25% return is equivalent to 3.79% compound growth. Tax payers can also benefit from a tax free return as the plan is also available as an cash ISA, and with longer term Cash ISA fixed rates even lower around the 2.30% AER mark, this could be an appealing alternative.
Both are treated the same for FSCS purposes (up to the usual deposit scheme limits) but unlike the fixed rate bond, the return on the Investec plan is dependent on the FTSE and so is not guaranteed.
Target return – 25% if the Index is above 75% of its Initial Level
Capital Protected Product
Eligible for the Financial Services Compensation Scheme up to £85,000 for an individual or up to £170,000 for a joint deposit account
Available for Cash ISA, ISA Transfer and Direct Investments. Also available to businesses, charities, trusts and SIPP and SSAS pension schemes
Investment term: 6 Years
Arrangement fee applies
Minimum single investment: £3,000
Maximum ISA investment: £20,000
Maximum for ISA transfers and non-ISA investments: £3,000,000
ISA Transfer applications: 8 February 2019
Direct & ISA applications: 1 March 2019
Reduced arrangement fee: For investments of £100,000 or more into this plan, processed through Fair Investment Company, your arrangement fee will be reduced to 2% of your original investment.