Tried to post earlier but it seems my post breached guidelines. I will try and summarize my experience of kick out bonds etc in a different way so as not to breach guidelines again. I've had good experience with them. I currently have personal investments comprising
1) Passive Index Trackers that pay out on an up to 35% downside
2) Fixed income of 4% per annum for 5 years. Capital at risk if 3 main indexes(diff from above) drop below 40% in 5 years. 20% paid regardless of performance
3) Gold Tracking indexes that pays on up to 40% downside.
4) One broad based sector specific index that is going to pay out generously in a month after one year unless world falls off a cliff.
One of the big advantages I think I have is that my tax on these is CGT apart from the income bond so my CGT allowance gets utilized. Also and importantly there is no annual management charge and I've read enough on here about fees to know how important that is. I've also have a lot of down side protection coupled with the ability to make money in falling markets for the inevitable correction that's coming. I've have seen crap kick out investments but I'd be interested to hear the downsides that I'm missing on what I have in my investments above.
I would ask Revenue whether these are CGT. Here is an extract from a particular kick-out bond:One of the big advantages I think I have is that my tax on these is CGT apart from the income bond so my CGT allowance gets utilized.
kick-out bond said:Your investment is held in the form of a Senior Bond. Based on our understanding of current legislation, regulations and practice, we expect the returns may be subject to CGT.
WARNING: This is based on our understanding but does not constitute tax advice and investors should not place any reliance on it.
Tracker bonds ...involve deducting fees and commissions from your investment amount, buying a put/ call option and lumping the rest on deposit for the rest of the term. If the stock price is higher at maturity, the exercise the call and you make a return. If the value is lower, the deposit return gives you your money back.
I see concern here from solid posters/advisers and am wondering what I'm missing?
With the current low interest rates the amount required to be left on deposit to guarantee the capital in 5 years must quiet high, nearly 95%. That leaves 5% for fees and buying the option.
What type of option is likely to be bought ? I would suggest a very speculative one, with a small chance of a high return.
Ah Boss let me explainDuke says he is not opposed to them. I am because few consumers could possibly understand their complexities. And those who do would never invest in them.
Brendan
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