Structured deposits, unlike pure investment products, guarantee that, regardless of how the stock market performs, your initial investment will be returned in full at maturity.
What is a Structured Deposit?
Structured deposits offer exposure to stock market growth but with a guarantee that your initial investment will be returned at maturity.
They provide an opportunity for better returns than through a traditional savings account, but no guarantee of any return being achieved.
They should not be confused with a structured investment, which do not promise the return of capital.
How do they work?
- You deposit a lump sum for a fixed period, once the period is over (the plan hits maturity) you will receive your initial investment back plus potential interest.
- The interest depends on the plan terms and features, which one of our Independent Financial Advisers would discuss with you in great detail.
Name: Structured Deposit Plan A
Term: 5 Years
Return: 2 x any rise in the FTSE 100 Index (double the rise)
If you invested £10,000 into the above plan today and in 5 years time and the FTSE 100 had risen 25% you would receive your £10,000 back plus £5,000 (50% of your initial investment) in interest. In total, you would receive £15,000.
If you invested £10,000 into the above plan today and in 5 years time and the FTSE 100 had risen 10% you would receive your £10,000 back plus £2,000 (20% of your initial investment) in interest. In total, you would receive £12,000.
If you invested £10,000 into the above plan today and in 5 years time and the FTSE 100 had fallen 10% you would receive your £10,000 but zero interest. In total, you would receive £10,000.
Due to the effects of inflation, your capital could be worth less in 5 years than it is today. Inflation is current around 2% year, using the above example £10,000 today could be worth £9,000 in 5 years if that money is not invested or earns no interest. This is the main risk associated with Structured Deposits; however, with high street banks offering such poor interest rates, they can be attractive to the right investor.
Availability of Structured Deposit plans change regularly; please contact us to find out what Structured Deposits are available and to discuss your suitability with one of our Independent Financial Advisers.
Who should invest in Structured Deposits?
- Can invest for the medium to long term (3-10 years).
- Want full return of their initial capital.
- Have a low to medium appetite for risk.
- Who seek potentially higher returns/yields as compared to traditional fixed deposits offered by high street banks.
- Want protection from the FSCS (Financial Services Compensation Scheme).