2.7% p.a with GS

D

Dan_The_Man

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Any considerations with this one?

Term: 2 years
Capital Protection: 100%
Capital Protection Goldman Sachs Group Inc
Provider: (Moody’s: A2/S&P: BBB+/Fitch: A)
Fixed Return: 2.7% paid out at the end of each year regardless

to investment performance
Underlying Index: EuroStoxx 50 Index (SX5E Index)
Potential Return Additional return of 0.05% if EuroStoxx 50 Index is
at Maturity: at or above its initial level
Summary Risk
Indicator: 2
Minimum Return: 5.4%
Maximum Return: 5.45%
Minimum Amount: €100,000
Closing Date: 30 August 2023 (or earlier if fully subscribed)
Liquidity: Daily, via stock market listing
Taxation: Income Tax for Personal Investors

Availability: Personal: Conexim and Omnium Investment

Platforms
Pension: Self Administered and Self Directed
Insured Plans
 
Financial engineering is back i see

What does an inverted yield curve mean for investors?

An inverted yield curve shows that long-term interest rates are less than short-term interest rates. With an inverted yield curve, the yield decreases the farther away the maturity date is.

I’ve been reviewing investment options taking account of the term structure of the bond market and taxation considerations.

You don’t normally expect to earn more interest from a more liquid position short term compared to a longer term fixed deposit.

If someone has a lot of cash and is considering locking it away for a few years either via a bank fixed term deposit or state savings certificates there are currently some very good low risk alternatives available.

You can currently earn around 4% gross on an ultra short term fixed interest UCITS fund which we helped to launch in Europe.

The duration is 0.59 years so a 1% increase in interest rates would result in a short term capital loss which would take around 6 months to recover.

It’s also very high credit rated with an average A rating.

For a personal investor net of tax and ongoing costs you’d net around 1.9% net with daily liquidity so it compares well with a bank account or structured product fixed for 2 years at 2% gross AER net of dirt 1.32% or 10 year state savings at 1.5% tax free.

Increasing duration to 2.7 years boosts the yield to 5.2% gross (around 2.5%pa net)

So this all points to the inverted yield curve currently offering some very attractive returns at the short end without the need to take either credit or term risk or lock Capital away for 2 years or more
 
Marc said:
Financial engineering is back i see

What does an inverted yield curve mean for investors?

An inverted yield curve shows that long-term interest rates are less than short-term interest rates. With an inverted yield curve, the yield decreases the farther away the maturity date is.

I’ve been reviewing investment options taking account of the term structure of the bond market and taxation considerations.

You don’t normally expect to earn more interest from a more liquid position short term compared to a longer term fixed deposit.

If someone has a lot of cash and is considering locking it away for a few years either via a bank fixed term deposit or state savings certificates there are currently some very good low risk alternatives available.

You can currently earn around 4% gross on an ultra short term fixed interest UCITS fund which we helped to launch in Europe.

The duration is 0.59 years so a 1% increase in interest rates would result in a short term capital loss which would take around 6 months to recover.

It’s also very high credit rated with an average A rating.

For a personal investor net of tax and ongoing costs you’d net around 1.9% net with daily liquidity so it compares well with a bank account or structured product fixed for 2 years at 2% gross AER net of dirt 1.32% or 10 year state savings at 1.5% tax free.

Increasing duration to 2.7 years boosts the yield to 5.2% gross (around 2.5%pa net)

So this all points to the inverted yield curve currently offering some very attractive returns at the short end without the need to take either credit or term risk or lock Capital away for 2 years or more
Click to expand...
The structured product I'm currently looking at is 2.7% gross pa ...applying dirt 1.7% pa (approx.)
..where can i learn more around this UCITS fund? ..since the net and terms seem more favorable.
 
RedOnion said:
Thread 'Term Deposits (Fixed Lump Sum Savings)' https://www.askaboutmoney.com/threads/term-deposits-fixed-lump-sum-savings.101813/
Click to expand...
I don't know any of these providers ...Freedom24 , Raisin ...what's the 3rd party risk attached to these?


ClubMan said:
It would help to link to the relevant info:


Click to expand...

indeed ..i didn't know there was a link ..i received via email
 
ClubMan said:
They are various European banks.
They are discussed in various existing threads.
In most or all cases the deposit guarantee up to €100k applies.
Click to expand...

thanks ...I'm aware of these but I'm not going to place a 100k with them.
'the point' for me is this ...100% Capital Protection at maturity. The Capital Protection is provided by Goldman Sachs Group Inc (BBB+/A2/A).
yes its a little less return (i dont care about the small index kicker) ..but seems more secure ..

I'm on here as I'm open to inputs and perhaps I'm wrong...

http://www.brokersolutions.ie/2017/...r-100-Capital-Secure-Income-Bond-Brochure.pdf
 
Dan_The_Man said:
I don't know any of these providers ...Freedom24 , Raisin ...what's the 3rd party risk attached to these?
Click to expand...
Fair enough.
A higher return is available just buying irish government bonds, with the capital gain element tax free.

The people making most money on the product you linked are the product producer and the broker.
The returns are most likely subject to income tax rather than DIRT.
 
RedOnion said:
What's the point? A maximum of 0.05% extra?
There are better returns available on vanilla deposits.
Click to expand...
This is truly bizarre. Here is the relevant Table from the brochure.
1691409692590.png


So the only relevance of Eurostoxx is to possibly give you another fiver. And yet the brochure waxes lyrical about the Eurostoxx, an example of the text is as follows:
1691410021530.png


Clearly the Eurostoxx aspect is purely for marketing purposes as it has a completely negligible effect on the returns. Personally I would be put off by all this Eurostoxx guff. It makes it look like there is stockmarket risk attached to what is essentially a deposit.
 

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Duke of Marmalade said:
Personally I would be put off by all this Eurostoxx guff. It makes it look like there is stockmarket risk attached to what is essentially a deposit.
Click to expand...
The only thing I can think of is that potential 0.05% changes tax treatment of the entire return, but I'm struggling to think of a scenario where its a beneficial treatment.
 
RedOnion said:
The only thing I can think of is that potential 0.05% changes tax treatment of the entire return, but I'm struggling to think of a scenario where its a beneficial treatment.
Click to expand...
Interesting thought; so it possibly switches from DIRT. Is income tax better than DIRT? For pension wrappers does it matter?
Maybe a regulatory thing - if there is no stockmarket dimension maybe it gets caught by banking rules. I do remember life assurance products had to have a 1 in a 1,000 kicker on death to make it qualify as a life policy.
In any case there is no justification for all the palaver about the Eurostoxx.
 
Duke of Marmalade said:
Mind you, at a minimum punt of €100k they may not be targeting that constituency.
Click to expand...

Where should someone with no taxable income invest?

A friend of mine has retired early and has no income other than deposit income and some small dividend income. I thought this was discussed previously on Askaboutmoney but I can't find it. Investing in a company like Ryanair which pays no dividends would not be a good idea as he will be taxed...
www.askaboutmoney.com
 
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