Guaranteed equity bonds
There are some excellent savings rates on offer at the moment offering well above base rate, but both the Post Office and the Britannia Building Society are offering something a little different, presumably to calm the fears of investors spooked by stock market volatility. Both have Guaranteed Equity Bonds (GEBs) which allow you to benefit from rises in the market, while also guaranteeing you’ll get all your money back at the end of the investment term, even if markets fall.
There are downsides to this - you’re not going to get absolute top rates of interest for example. The Post Office’s Five-year Saver account splits your cash in two, with half earning 5.75 per cent gross interest over the five-year term, and the rest earning 50 per cent of any increase in the FTSE 100 over the term. Should the FTSE fall, you get your original investment back plus the interest you earned on the other half. The account is open until 4 October, with £500 the minimum investment.
Britannia’s Guaranteed Capital Bond is another five-year deal aiming to offer ‘a buffer against the effects of inflation’. It does this by giving you either 50 per cent of growth in the FTSE 100 or any percentage growth in the Retail Price Index, whichever is the greater. See www.britannia.co.uk for more.
