Whenever you’re dealing with money, it’s important to understand exactly what you’re getting and where your money is going. Unfortunately, in many cases people that are making an investment don’t quite understand what they’re doing.
It’s all too easy to fall into the trap of buying a financial product without doing your research, and being locked into a contract means that it’s not as easy to get out of a deal as it was for you to get into it.
Are Structured Products safe?
Structured Products are marketed as being a relatively risk-free investment. A large portion of your money is set aside to ensure that you get your initial capital back once your Structured Product matures and, whilst the other part of your money is invested for growth, there are usually assurances that very few people go away with less than they invested. As far as financial investments go, it sounds almost too good to be true.
In most cases, investors will only lose their money if their money has gone to a company that later goes bankrupt. Yet, the Financial Conduct Authority suggests that there are more risks than most people take time to consider.
What are the FCA’s issues with Structured Products?
The FCA has suggested that a typical investor can’t make a fully educated decision about Structured Products, simply because there’s too much going on. There are so many factors involved, meaning that the average person doesn’t weigh up the risks that might be involved.
What can Structured Products protect against?
Structured Products protect against Market Risks, meaning that you’re unlikely to lose your investment if the markets don’t fare as well as originally expected. However, they can’t protect against the risk of your financial investment being affected by inflation. It’s possible that you’ll invest £10k and that you’ll receive a £10k return, yet your return five years down the line may be worth significantly less than your capital was when you originally invested your money.
How do you make an informed decision?
If you’re risk-averse, or a first time investor, then investing your money in Structured Products remains one of the most reliable ways to ensure that you won’t lose your capital. However, as is the case with any investment, you’ll need to do your research. Pay careful attention to where your money is going and consider whether or not you can trust the organisation to be solvent until your investment matures. Don’t rush into any decisions, and ensure that you carefully consider the many different options that are available to you.
Equally, look for a Structured Product that offers early maturity if you’d like that as an option. Remember that there are a wide variety of Structured Products available, and that you don’t have to invest in the first one that you’ve seen.
Always compare Structured Products and search for what’s on offer from the leading UK providers, to be sure that your money is as safe as it can possibly be.