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Time to give your savings a boost?

Structured Deposits - an alternative option to holding cash in the bank

Thursday 14 January, 2021

If you are disappointed with the return on your bank saving products our financial adviser Vishal Gulrajani considers the merits of structured deposits.

While the priority for many of us remains the health of our friends and family, we know this time has also been an opportunity for many individuals to review their savings and investments.

Interest rates reduced on savings accounts

After the Bank of England reduced their base rate twice in March, many banks, building societies and National Savings and Investments have reduced the interest rates they are paying savers.

Industry experts are suggesting that interest rates will remain low for the foreseeable future and so, it might be worth reviewing whether there is a chance to get a higher return on your savings while not putting your capital at risk.

Could you get a higher return on your savings while not putting your capital at risk?

With this in mind, I thought I would share with you details of some savings products form Investec where your capital is safe but the interest rate that you receive at the end of the relevant term is linked to the performance of the FTSE 100 Index.

It is important to note that your money is not invested in the FTSE 100; it is deposited with Investec Bank plc and is eligible for the Financial Services Compensation Scheme (just like your current bank or building society).

I think one of the following might appeal to you.


FTSE 100 3 Year Defensive Deposit Plan 26

  • Term 3 years
  • Return of 3.75% if the FTSE 100 Index is higher than 90% of its starting level after 3 years (paid at maturity). This is equivalent to 1.25% a year (not compounded).
  • If the FTSE 100 finishes equal to or lower than 90% of its starting level, you will only get back your initial deposit.
  • The expected return at maturity is expected to be liable to Income Tax, although will be paid gross.

*Please note: The returns are dependent on the performance of the FTSE 100, which is observed on set dates and you accept that you may not achieve any return at all.


FTSE 100 3 Year Deposit Plan 62

  • Term 3 years
  • Return of 5.1% if the FTSE 100 is higher than its starting level after 3 years (paid at maturity). This is equivalent to 1.7% a year (not compounded).
  • If the FTSE 100 finishes equal to or lower than its starting level, you will only get back your initial deposit.
  • The expected return at maturity is expected to be liable to Income Tax, although will be paid gross.

*Please note: If you redeem your Plan before the end of the 3-year term, you may get back less than the amount you originally deposited.


FTSE 100 Kick-Out Deposit Plan 98

  • Term 6 years
  • Potential for maturity at the end of years 3, 4, 5 or 6 with a payment equal to 2.25% a year (not compounded) if the FTSE 100 is above its starting level.
  • If the FTSE 100 finishes equal to or lower than its starting level, you will only get back your initial deposit.
  • The expected return at maturity is expected to be liable to Income Tax, although will be paid gross.

In addition, Investec have made available a fourth tranche of their ESG-linked Deposit Plan. With this plan, the interest rate that you receive at the end of the relevant term is linked to the performance of the FTSE4Good UK 50 index. The details are as follows:

FTSE4Good 6 Year Deposit Plan 4

  • Term 6 years
  • Return of 15.3% if the FTSE4Good UK 50 is higher than its starting level after 6 years (paid at maturity).  This is equivalent to 2.55% a year (not compounded).
  • If the FTSE4Good UK 50 finishes equal to or lower than its starting level, you will only get back your initial deposit.
  • The expected return at maturity is expected to be liable to Income Tax, although will be paid gross.

Vishal Gulrajani, Financial Adviser in Cheshunt, Hertfordshire said:

‘Many clients are contacting us disappointed with the interest rates being offered on their banks and building society savings accounts and they are looking for alternative investment options. Before offering them financial advice we will consider the risk they are prepared to take and the return they require. Many of these structured deposits are good investments for anyone new to equity investing. We talk through the risks of these investments, so our clients completely understand how they work before they invest in them. If you would like to find out more about how structured deposits work or would like a financial planning review, please contact a member of the Thomas Oliver financial planning team on 01707 872000. We offer a free initial consultation to discuss your finances.’

These plans may not be right for you if:

  • You want a regular income and dividends
  • You are dependent on payments being made on a regular basis
  • You may need immediate access to their money before maturity
  • You cannot commit to the full plan term
  • You want a guaranteed return on their deposit
  • You want to add to their deposit on a regular basis
  • You do not want to have money held in a UK onshore asset that is subject to UK tax rules.

Please refer to the Plan brochure for full product details, the risks involved and the terms and conditions.

The Plans referred to herein are not sponsored, endorsed, or promoted by the index providers, and the index providers bear no liability with respect to any such Plans or any index on which such Plans are based. The prospectus and relevant Plan brochure contain a more detailed description of the limited relationship the index providers have with the license and any related products.

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