Hi all, I am considering investing in a tracker bond but want to know more about them before I do so.
My understanding of a tracker bond is where I invest my money in an institution and am offered some sort of guarantee to get some or all of my initial investment back after a period of time.
The money that I invest "tracks" a particular group/basket of shares on a particular stock market index. If there is any growth over the period of the tracker I get a percentage of the growth, if there isnt my initial investment is still secure.
Can someone confirm if this is correct please?
I have some questions and would be grateful if someone could help me out:
Is the money I pay in actually "invested" or is it held on the balance sheet of the bank that is facilitating the tracker, which enables them to lend it out in the form of mortgages/loans etc?
Why are trackers offered by banks via brokers/life assurance companies? Is it an effort by banks to raise much needed funds to lend to customers? Whats in it for the banks? I know that the broker and the life assurance company will receive commission/management charges.
What are the advantages / disadvantages / risks of investing my money in one of these things?
Would I not be better investing my money in a deposit account where there would be less charges/commission involved?
Thanks in advance for any answers provided.
My understanding of a tracker bond is where I invest my money in an institution and am offered some sort of guarantee to get some or all of my initial investment back after a period of time.
The money that I invest "tracks" a particular group/basket of shares on a particular stock market index. If there is any growth over the period of the tracker I get a percentage of the growth, if there isnt my initial investment is still secure.
Can someone confirm if this is correct please?
I have some questions and would be grateful if someone could help me out:
Is the money I pay in actually "invested" or is it held on the balance sheet of the bank that is facilitating the tracker, which enables them to lend it out in the form of mortgages/loans etc?
Why are trackers offered by banks via brokers/life assurance companies? Is it an effort by banks to raise much needed funds to lend to customers? Whats in it for the banks? I know that the broker and the life assurance company will receive commission/management charges.
What are the advantages / disadvantages / risks of investing my money in one of these things?
Would I not be better investing my money in a deposit account where there would be less charges/commission involved?
Thanks in advance for any answers provided.