Growing and protecting your money

With the Bank of England base interest rate held at a record low level of 0.5% for over four years, bank and building society savings account interest rates remain unattractive.

Investors with bank and building society Cash Individual Savings Accounts (ISAs), despite the tax free status, have been particularly affected.  People who have held variable rate ISAs for several years may have accumulated a considerable amount, although typically they can be receiving an interest rate of between just 0.1% and 0.5%.  This happens because attractive introductory bonus rates, for the initial six or twelve months, are subsequently followed by much lower rates.  It is possible to effect ISA transfers but these generally result in rates below the current rate of inflation.

Fortunately there are alternatives.  Deposit based structured products have become popular as an attractive, lower risk investment option.

Deposit plans offer the opportunity of an investment protected by the Government’s Financial Services Compensation Scheme (FSCS), up to £85,000 per individual or £170,000 joint.  These plans can be held either as an ordinary investment, i.e. with the returns being subject to income tax liability, or as an Individual Savings Account and it is possible to effect ISA transfers into these plans.  The returns on deposit plans are potentially more attractive and could produce, for example, 4.5-5% per annum.

Some deposit plans are designed to pay out the full maturity value if the FTSE 100 (Stock Market) index is one or more points higher at maturity compared to the Initial Index starting level of the plan.  However, should the FTSE 100 index be lower at maturity, only the original investment would be repaid, albeit in full.  A number of deposit plans now have a kick-out facility, which provides four, or more, timed opportunities when the plan can mature/pay out subject to the FTSE index level being higher.

Birkett Long is holding free seminars with expert investment, tax planning and wealth management advice on 11 February in Colchester and on 13 February in Chelmsford.  Anyone can attend.  You don’t have to be a Birkett Long client and there is no obligation on you to take any further action.

To register your interest or find out more, email Sarah Watson at or call 01206 217334.