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Structured Products – Contract based investing

When is a Structured Product not a Structured Product (Structured Capital at Risk Product – SCARP)?

When the Structured Investment is a Deposit Plan – linked to an Investment Market index, protected by the Financial Services Compensation Scheme (FSCS)

We often hold conversations with investors and many financial advisers and industry professional who do not understand the mechanics of Structured Product/Deposit investing in relation to the detail of various plans and risk strategies.

Very low interest rates have hurt returns for investors (holding cash deposits) since the global financial crisis and unconventional monetary policy, which seems likely to continue for some time to come – some saying low rates are here to stay!  So investors must be wary ……….  Some investors have increased their ‘risk exposure’ – chasing returns at a time of political uncertainty, which could lead to economic pain.

Question …… So, what are the potential solutions for investors who are ‘wanting’ a greater return than inflation but concerned about risk to capital?

Answer …… consider investing in investment market linked Structured Deposits :

You may benefit from reading previous blogs that we have written which explain in more detail how a Deposit Plan works – click on the links and read below.

How does a potential return of 7% p.a. (simple) over 6 years sound, with no risk to the initial capital, which is FSCS protected for eligible investors?……  Take a look at the Investec Deposit range by clicking on the link above.  (Please note that the terms are likely to have changed from the contract terms available in previous articles).

Also, an article written on 18 December 2018 “What are Structured Deposits and Structured Investment Plans?”.

A deposit plan includes “investment market risk” as the returns are dependent on index performance but the outcome of the contract terms provides for the return of the original capital invested upon the investment term ending.  The FSCS protection provides protection against the failure of the issuer – for qualifying investments – up to £85,000 per individual eligible investor.

Therefore, up to £85,000 per individual has ‘no risk to capital’ inherent in deposit contracts and are ‘backed up’ by the FSCS compensation scheme delivering the ultimate security for investors!

We very much like (no, we actually love) many of the deposit products available via Investec, although downward pressure on rates have been applied recently, so some headline rates have reduced recently.

For investors looking at investment terms of between 3 and 6 years – look at the Investec Deposit plans; we know that investors are seeing the benefit of the terms and the protection.

Investments are available as an ISA, Direct Investment or via SIPPs or SSAS.  (We charge an increased fee for investment via SIPP/SSAS due to the increased administration).

Don’t Forget the Risks

As with all forms of investments there are risks involved.  Structured Deposits could deliver only the return of the original capital invested at the end of term; thus, the investor could suffer inflation impact.

The promotion of this product does not constitute ‘Advice’ to invest.  Advice is always specific to an individual investor’s circumstances and needs, following the process of ‘know your customer’ with the aim of ensuring that the product is suitable for the investor.

If you would like independent (unbiased) financial advice at low cost, simply get in touch.

Kind Regards.


Best Price FS Team



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