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With my 7% bond expiring they have offered me this 5 year product with 6% on half my funds, i.e. £11k and the other £11k in Equities. Should I tie up for this long?
particularly as I amcurrently a higher rate tax payer aged 60 but plan to reitrn anytime during next 5 years - although may fit well with this 5 year period - all undecided now.
Is there a better product for my age and tax bracket?
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27guaranteed equity bonds in general are not the best because you don't get dividends, hence the bank can afford to offer a guarantee.
I am not an investmenet advisor, but if it was my money, i would invest in a tracker with low fees given the market is the cheapest it has been since the dotcom bust
Posted on 30 September 2009 |
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824The 6% they are offering on half your investment includes a partial kick-back of the commission that they earn from the so-called equity portion.
That equity portion is not invested in equities but in derivatives. You don't get the dividends that you would if you bought a Tracker. You also don't get all the capital gain.
Bear in mind that they have chosen a long enough period such that there is virtually no chance that there will not be an increase based on past history. But they are charging a lot of money for the priviledge of having that guarantee.
Then you will be charged higher rate tax on something which should be a capital gain and would probably be subject to the annual exemption.
I wouldn't do it.
Mike
Posted on 30 September 2009 | Love 0 loves
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