Guaranteed Capital Bond - Growth Protection
How the Guaranteed Capital Bond could work
The following example is not based on a real-life case, but demonstrates how the Bond could work.
Carol and Richard are keen to make their money work harder for them.
They are prepared to set aside some money for at least 5 years to improve their potential return over the longer term, but they want the security of knowing that at some point in the future they are guaranteed to be able to get their money out without any losses.
After two years, their £10,000 initial investment has grown to £11,500. They want to protect the profit they have made, and decide to replace their initial Guarantee by buying another one to protect their initial investment plus their £1,500 growth for the next 5 years.
Over the next year, the underlying value of their Bond has fallen to £11,000. They decide to take no action – leaving their existing Guarantee in place.
Three years on, their investment has recovered, and grown to £13,750. Once again, they choose to replace their Guarantee and buy a new one, to "lock in" their latest profits. This means that, no matter what else happens, their Bond is guaranteed to be worth no less than £13,750 on the 5th anniversary of their new Guarantee purchase.
This is not a projection. The Guaranteed Capital Bond is a stockmarket based investment. There is no certainty that you will make a profit.
Year | Value | Action |
|---|---|---|
0 | £10,000 | |
1 | ||
2 | £11,500 | Replaces original Guarantee |
3 | £11,000 | |
4 | ||
5 | ||
6 | £13,750 | Replaces 2nd Guarantee |
7 | ||
8 | ||
9 | ||
10 | ||
11 | £13,750 | Guaranteed value at the end of latest Guarantee |
The guarantees have to be "purchased" and involve a charge. See the Key Features document for full details.
