Examine any best buy table and you will currently see a host of fixed rate savings bonds with headline rates hovering around the 7% mark. Ostensibly, this is mouth-watering stuff but once you factor in tax and inflation, you have to ask if depositors are making much, if any, positive headway. So how are IFAs responding?
One option for IFAs keen to steal a march in this area is the annual kick-out product. Currently offering double-digit headline rates due to market volatility, these investments pay a fixed return – plus the original capital back – after 12 months provided the market to which the investment is linked has not fallen at the date of the first anniversary. If it has, the plan simply continues until its second anniversary, when it will kick-out – this time delivering twice the return – if the index level then reaches or exceeds its original starting level. This can continue all the way through...
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