Bank of Ireland capital investment bond

DeeKie

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What do you make of Bank of Irelands new capital protection bond. It is suggested as a low risk product and has 95% capital protection feature with maximum return of 40% over a fixed term of 5 years and 11 months. Im considering it, but am a bit hopeless about these things. Some features:


· Maximum investment per individual is €100,000 or €200,000 on a joint application.

· Closing date of investment is 7thDecember 2018
 
All of these products should be ignored.

They are complicated and so very difficult to evaluate. You have to study them a long time to find the catches.

Some honest brokers have stopped selling them as they had not realised how bad they were until after they matured.

BoI has not invented some way of turning base metal into gold.

Brendan
 
Thanks Brendan. It seemed ok to me but then so does the odd bet on a horse. I guess what gave me comfort was the colour coded risk profile. Don’t they have to follow rules for those? I’ll keep reviewing it.
 
The way these things work is:

Of your premium of (say) 100
Probably 90 goes into deposit to provide the 95 guarantee after 5 yrs and 11 months.
2-3 goes on expenses and probably 3 goes on commission.

Therefore 100 - 90 - 2 - 3 = 5 to invest in the stock market. How much upside are you going to get with 5 pc of your investment in the stock market? So most likely you’ll get something between 95 pc to maybe 105pc of your investment back. With expenses and commission deducted everyone’s a winner except you (unfortunately).

(Actually the split is on page 22 of the brochure - I’m not too far off the mark!)
 
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The way these things work is:

Of your premium of (say) 100
Probably 90 goes into deposit to provide the 95 guarantee after 5 yrs and 11 months.
2-3 goes on expenses and probably 3 goes on commission.

Therefore 100 - 90 - 2 - 3 = 5 to invest in the stock market. How much upside are you going to get with 5 pc of your investment in the stock market? So most likely you’ll get something between 95 pc to maybe 105pc of your investment back. With expenses and commission deducted everyone’s a winner except you (unfortunately).
Such a clear explanation! Thanks so much.
 
Had a read of brochure and looks very complicated as "index " changes over time and "exposure" to it changes over time..........
 
The way these things work is:

Of your premium of (say) 100
Probably 90 goes into deposit to provide the 95 guarantee after 5 yrs and 11 months.
2-3 goes on expenses and probably 3 goes on commission.

Therefore 100 - 90 - 2 - 3 = 5 to invest in the stock market. How much upside are you going to get with 5 pc of your investment in the stock market? So most likely you’ll get something between 95 pc to maybe 105pc of your investment back. With expenses and commission deducted everyone’s a winner except you (unfortunately).

(Actually the split is on page 22 of the brochure - I’m not too far off the mark!)

The 5 is used to buy options on whatever index they are tracking - hence the ability to say a % of performance of underlying asset.

The product isn't really that complicated - it is effectively a combination of a deposit and an option. By bundling together the pricing becomes less transparent and the ability to blend charges into the structure becomes easier.

DeeKie - if you wanted to do it yourself, take 5% or what you could invest in this and buy long term exchange traded index options through a broker account. Effectively the same thing but cheaper
 
If you want to enjoy returns higher than deposits, invest a portion of your money in an equity index.

These structured bonds are a waste of time and money. With no bond yield nor deposit rates, they have become extremely complex. Unless you fully understand them and can explain them to your gran so she'll understand, stay away from them.

Steven
www.bluewaterfp.ie
 
Thanks Brendan. It seemed ok to me but then so does the odd bet on a horse. I guess what gave me comfort was the colour coded risk profile. Don’t they have to follow rules
Did you ever follow up and if you ignored, where did you look to, to in invest?
 
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