Low interest rates force savers to take risks
10 August 2010 / by Rachel Mason
The base rate being stuck at 0.5% and savings rates averaging just 1.63% is forcing savers to take risks, according to recent research.
A survey by Fair Investment Company has revealed that savers frustrated with low rates on savings accounts are prepared to take more risk with their cash in hope of better returns.
The firm found that 69 per cent of those polled said they won’t consider investing in cash while rates remain so low, and will instead opt for higher risk investments.
Fair Investment Company found that most would opt for structured products over cash, which they say is ‘understandable’ as structures offer “a way of moving into riskier assets while keeping a level of capital protection”
Of the 69 per cent who would not be looking at cash, 55 per cent would go for structures; other investment options respondents said they would choose included equity funds (14%) and corporate bond funds (16%).
Nick Scarrett, head of investment and pensions at Fair Investment Company said “The average savings rate is currently just 1.63% while the average cash ISA rate is 2.07%. Even the top rates aren’t paying much over 4% when you fix for 5 years, so it is not really surprising that savers have had enough of earning such little interest on their cash.”
He continued, “structured products are often popular with investors looking for higher returns than on cash savings but not willing to take the risks involved with stock-market investing. And with the financial climate as it is, and rates more likely to fall further than increase, a diversified investment portfolio including some structured products is certainly worth considering.”
| Product Name | ISA Option | Maximum Potential Return | Term | More Info | |
|---|---|---|---|---|---|
 |
FTSE 100 Enhanced Kick Out Plan |  |
10% per annum |
Up to 6 years |
More Info > |
| Structured investment plan with the potential to mature after years 1, 2, 3, 4, 5 or 6. If the plan matures early it will return 10% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer. | |||||
 |
10:10 Plan | |
11% per annum |
10 years | More Info > |
| Structured investment plan with the potential to mature after years 2, 3, 4, 5, 6, 7, 8, 9 or 10. If the plan matures early it will return 11% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer. | |||||
|
FTSE 100 Step Down Kick-Out Plan | |
7.25% per annum |
Up to 6 years |
More Info > |
| Structured investment plan with the potential to mature after years 2, 3, 4, 5 or 6. If the plan matures early it will return 7.25% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer. | |||||
|
FTSE 100 Defensive Step Down Kick-Out Plan | |
6.15% per annum |
Up to 6 years |
More Info > |
| Structured investment plan with the potential to mature after years 2, 3, 4, 5 or 6. If the plan matures early it will return 6.15% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer. | |||||
|
FTSE 100 Kick Out Deposit Plan | |
6% per annum |
Up to 6 years |
More Info > |
| Capital protected deposit plan with the potential to mature after years 3, 4, 5 and 6. If the plan matures early it will return 6% times the number of years the plan has been in force. Also available for Cash ISA and ISA transfer. | |||||
|
6 Year Defensive Deposit Plan | |
25% at end of term |
6 years | More Info > |
| 6 year capital protected structured deposit plan which aims to return 25% if the FTSE 100 is higher than 75% of Initial Level. Also available for Cash ISA and ISA transfer. | |||||
The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.
| Product Name | ISA Option | Income Yield | More Info | |
|---|---|---|---|---|
|
FTSE 100 Enhanced Income Plan | |
4.20% fixed income |
More Info > |
| TAX FREE FIXED INCOME: 5 year investment plan paying a fixed monthly income of 0.35% (equivalent to 4.20% annually). Available as a Stocks & Shares ISA, non-ISA investment and ISA transfer. | ||||
|
FTSE 100 Defensive Income Plan | |
7.20% per annum |
More Info > |
| A maximum 8 year investment plan paying a potential annual income of 7.20%. Also available for Stocks & Shares ISA and ISA transfer. | ||||
 |
FTSE Monthly Contingent Income Plan | |
6.00% per annum |
More Info > |
| Maximum 10 year structured investment plan paying a potential monthly income of 0.50% (equivalent to 6.00% annually) and the opportunity to mature quarterly from year 2 onwards. Also available as a Stocks & Shares ISA investment and ISA transfer. | ||||
Important Information: Structured investment plans are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. Income and growth returns are not guaranteed. There is a risk of losing some or all of your initial investment due to the performance of the underlying Index or commodity. There is also a risk that the company backing the plan known as the Counterparty may be unable to repay your initial investment and any returns stated.
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