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Guaranteed Investment Account - I N G Direct

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http://www.ingdirect.co.uk/savings/our_savings/gia/

Had a letter throught the door about this yesterday.

Something strikes me as odd that ING have just introduced this new savings vehicle, but i just can't put my finger on it. In three years time whether the FTSE is up or down you get your original investment back. But what if the FTSE has gone down and inflation has gone up a considerable amount in that time? Ouch! :(

Comments?

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http://www.ingdirect.co.uk/savings/our_savings/gia/

Had a letter throught the door about this yesterday.

Something strikes me as odd that ING have just introduced this new savings vehicle, but i just can't put my finger on it. In three years time whether the FTSE is up or down you get your original investment back. But what if the FTSE has gone down and inflation has gone up a considerable amount in that time? Ouch! :(

Comments?

No interest paid on this account, so I suppose if the FTSE goes down they've had your money at no cost for at least 6 months (exit windows).

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Oh look, you can see how the FTSE has performed, how nice. It doesn't show August though.

I got roped into seeing an IFA at the Portman (when they were separate back in April) and was encouraged to go for their stock tracker with guaranteed deposits. The chap knew nothing of economics, and couldn't really understand my point about compound interest. The product was something like a max growth of x and minimum growth of y, all following the FTSE, over 5 years. I wanted to know what the annual compound APR rate was for this product was to compare to a savings account; because I couldn't do it in my head he just divded the maximum growth by 5 to get the yearly rate...! When I got home I worked out in Excel what is was, and it was something like a min of 1% and a Max of 7.5%.

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No idea when they launched this but if it's been in the last few weeks then this is very cynical (suprise suprise). I doubt very much whether teh FTSE will be climbing teh dizzying heights it has done over the last 3 years and by most analysts we are in for a serious correction.

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No idea when they launched this but if it's been in the last few weeks then this is very cynical (suprise suprise). I doubt very much whether teh FTSE will be climbing teh dizzying heights it has done over the last 3 years and by most analysts we are in for a serious correction.

I'm waiting for one of them to come out with an HPI linked bond. :) "Invest in property with no risk! Get 65% of house price inflation on your money with no risk to your capital" Then we'd know the only way was down. :)

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I'm waiting for one of them to come out with an HPI linked bond. :) "Invest in property with no risk! Get 65% of house price inflation on your money with no risk to your capital" Then we'd know the only way was down. :)

Pretty sure Britannia were offering something like that a couple of years ago - linked to Halifax price index IIRC.

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Pretty sure Britannia were offering something like that a couple of years ago - linked to Halifax price index IIRC.

these are simple zero coupon bonds plus a call option on the ftse. They have been around since mid 90s or so. if zero coupon bond costs 70, the option will cost around 23. the bank keeps 3% risk free and passes 5% onto the IFA (or keeps itself if sold direct).

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I don't think this is unusual, although the timing as mentioned is certainly opportunistic. They probably fund it with a call warrant (or whatever the pro's call it) and then use the rest of your money for whatever nefarious purpose they like.

It's all about timing. If you bought one of these at the start of 2000 you would have got your money back (better than everyone else who was invested in the market). 2002 you might have won big time (well 65% of big time anyway). But then if you were able to time it right, you might as well by the shares yourself or put it in a tracker.

(No advice intended here).

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Funny thing is, I saw Egg are doing the same thing.

My thoughts were that if I were to offer the same deal to anyone, I would put it in a savings account for 5 years rather than in the FTSE.

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There is one reason only for the appearance of this account. Their analysts have concluded that the ftse will track below the savings rate for the next year or two.

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