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RodCrosby2

Ftse-100 Accumulator

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Is this a good investment?

http://www.rbs.co.uk/downloads/private/fund1_annual.pdf

I have been offered something very similar [identical brochure] by another bank, with an annual rate of 8%.

For the FTSE-100 to fall 50% from here, it would have to fall back to its level as at 13/2/1991, which surely is extremely unlikely. That is the only way the capital is at risk.

If the FTSE-100 is a point higher this time next year I walk away with 8% tax free. Or, if not, on any subsequent nth anniversary I walk away with n*8% tax free if the index is higher then.

I would only not earn anything if the FTSE-100 is no higher than today on each of the next five year anniversaries.

Go on - where's the catch?

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Is this a good investment?

http://www.rbs.co.uk/downloads/private/fund1_annual.pdf

I have been offered something very similar [identical brochure] by another bank, with an annual rate of 8%.

For the FTSE-100 to fall 50% from here, it would have to fall back to its level as at 13/2/1991, which surely is extremely unlikely. That is the only way the capital is at risk.

If the FTSE-100 is a point higher this time next year I walk away with 8% tax free. Or, if not, on any subsequent nth anniversary I walk away with n*8% tax free if the index is higher then.

I would only not earn anything if the FTSE-100 is no higher than today on each of the next five year anniversaries.

Go on - where's the catch?

I looked at one of these from Barclays earlier in the year, which would now look like a great investment. It was being offered with an annual rate of 13.5% not 8% though so I think yours is very low.

The downside is that you get zero dividends and have to give your money up front. You also have exposure to whoever provides the derivative hedge which might not be RBS and the product is not covered by government guarantee.

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I have been offered something very similar [identical brochure] by another bank, with an annual rate of 8%.

They're raising funds in the expectation of making far bigger profits from the money. If you'd invested six months ago, that 8% return would be a small fraction of the return of a FTSE tracker.

That could also be why the rates vary: with the FTSE's recent rise, 8% from here takes the FTSE fractionally higher than 13% from six months ago.

I'd just want to know who's underwriting it.

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