FTSE linked bonds

In message , Lasitha wrote

Read the small print carefully.

Do they only pay the increase in the share value or do they also give you the value of the dividends? I suspect the former.

After 5 years you could get back exactly what you paid in i.e. it will be worth less than it is today.

National Savings offer better bonds from time to time paying 110% of footse gains.

It is only worth investing if you are happy to tie your money up for the full term. Early withdrawals are penalised heavily. The capital guarantee isn't worth much unless you believe the footse index could be lower in 5 years' time. This is unlikely but possible. The last 5 years is the only time the index has fallen over such a period since 1984.

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Seconded.

Previous posts about them here -

Daytona

Be aware that NatSav 'bonds' pay a lump sum of interest in their final year and are taxed on the investor as such, with possibly marginal rate implications as the interest isnt spread over the years, , whereas many 'life office' type bonds are paid within a 'life bond' wrapper and any gains is paid after accounting for basic rate tax and any higher rate is 'top sliced' OR some funds can be MAXI ISAd.

I'm not arguing in favour of such things, just pointing out the differences.