Savings
Savings


Written by Oliver Roylance-Smith
20th September 2018

Savings focus – structured deposit plans proving popular

Above target inflation and low savings rates have for some time been a genuine concern for savers.

So what other options are there for those who still demand the full capital protection that comes with cash, as well as the safety net of the Financial Services Compensation Scheme in the event the worst happens? One answer is the structured deposit.

Capital held in a structured deposit is only at risk if the bank defaults, and so these plans offer no more risk to your capital than a fixed term deposit. The additional risk relates to the interest on offer, since it is normally linked to the performance of the FTSE 100 Index. This means that these plans have the potential for much higher returns than traditional fixed rate bonds, but unlike these products the interest is not guaranteed. Two of our most popular structured deposits come from Investec Bank.

For those who would like the opportunity to achieve returns in as little as 3 years, the Kick Out Deposit Plan offers the potential for an impressive 6% per year. The plan has a six year term, but if the value of the FTSE at the end of each year, from year 3 onwards, is higher than its value at the start of the plan, you receive 6% for each year (not compounded). That equates to an annualised rate of 5.67% after 3 years. Whilst for those happy to take a longer term view, the 6 Year Deposit Plan offers a fixed return of 45% if the FTSE ends the term higher than its value at the start of the plan. If this pays out, that equates to 6.38% annualised interest.

These latest versions are offering some of the highest headline interest rates ever from these long running plans, so if you’re looking for an alternative to try and get more from your savings, structured deposits might be a good place to start.

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Important Information: This is a structured deposit plan and is capital protected. 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 this event you may be entitled to compensation from the  Financial Services Compensation Scheme (FSCS), depending on your individual circumstances. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term.