Archive for the ‘Experienced Investors’ Category

Top 10 reasons to consider kick out investment plans

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As at the end of last week, the range for the closing levels of the FTSE 100 Index over the previous 52 weeks was between 5537.0 and 6941.2, a difference of 1404.2 points. So whilst the UK’s index of leading blue chip companies remains as volatile as ever, there is one type of investment plan that continues to be a popular choice with our investors. Kick out plans offer a defined return for a defined level of risk, which combined with the opportunity to mature early mean they can offer a compelling opportunity in a wide range of investment climates.

Whilst many investors find it harder to commit when markets are seemingly more unpredictable than normal, or as has happened over the last couple of month has been on a relatively steady upwards trajectory, kick out investments remain popular regardless of what is happening to the stock market. With this in mind, we give you our Top 10 reasons to consider a kick out investment plan.

1.  Defined return, defined risk

With kick out plans the potential returns on offer, as well as what needs to happen to provide these returns, is known up front before you commit your capital – a defined return for a defined level of risk. The investor therefore has the benefit of knowing at the outset the conditions that need to be met in order to provide the stated returns. This allows the investor to consider the potential upside in the context of the amount of risk they are taking, which can then be used to make an informed decision about whether to invest or not.

2.  Early maturity

These plans have a maximum fixed term which is normally six years, but the term ‘kick out’ refers to their ability to mature early depending on the movement of the underlying investment (for example, the FTSE 100 Index). The potential to mature early is usually every 12 months after the start of the plan, with the first opportunity normally occurring at the end of year one or year two. If early maturity does occur, investors receive an attractive level of growth along with a full return of their initial capital. This structure has proved popular in all types of market conditions.

3.  Potential for high returns

In addition to the opportunity for early maturity it is no doubt the potential for high growth returns that also contribute to the ongoing popularity of kick out plans. With most plans offering high single digit or even double digit returns for each year invested (not compounded), the opportunity can be a compelling one, especially since what has to happen to the stock market in order to provide these returns is known at the very outset.

4.  Investment returns even if the market stays relatively flat

Most plans offer the ability to kick out at the end of each year provided the level of the underlying investment at that time is higher than its level at the start of the plan. So if you’re not convinced the markets will rise in the future, and yet still wish to achieve investment level returns, this can be a compelling investment story and is perhaps why this type of investment has proved particularly popular while the FTSE remains at what are historically high levels.

Click here to compare kick out investment plans »

5.  Potential to beat the market

Should a kick out plan be designed to mature early provided the level of the FTSE 100 Index (or other underlying investment) at the end of each year is higher than its value at the start of the plan, then provided the Index has gone up, even if this is by a small amount, you will receive the headline return along with a full repayment of your initial capital. In the scenario where the stock market has only risen by a very small amount, then it is likely that this type of investment would have outperformed the market. This may appeal to those investors who are not confident the market will rise significantly in the coming years, which seems to be a more popular sentiment when markets are at historically high levels.

6.  FTSE linked

Many kick out investment plans are linked to the performance of the FTSE 100 Index, which is widely recognised as the proxy benchmark for most investment managers in the UK. Since the historical volatility of this Index is familiar to many investors, they are in a better position to consider the pros and cons of the plan within the context of the underlying investment and the associated risks involved.

7.  Investment returns even if the market falls slightly

There are also kick out plans that will provide competitive growth returns even if the underlying investment falls slightly, for example up to 10% or 20%. These so called ‘defensive’ kick out plans thereby cater for an even wider range of investor views in terms of what could happen to the stock market in the coming years – the current range of defensive plans offering the potential for high growth returns even if the FTSE falls up to 20%. Again, whilst the FTSE has remained at historically high levels, this has proved to be a popular feature.

Click here to compare defensive kick out investment plans »

8.  Some capital protection from a falling market

Your original capital is returned if the plan kicks out but should this fail to occur, and no growth is achieved, typically your capital will be returned provided the underlying investment has not fallen below a certain amount. This amount is normally a percentage of its value at the start of the plan, usually in the region of 40% or 50%. To put this into context, for a plan which offers a return of capital unless the FTSE falls by more than 50%, then based on last Friday’s closing value of 6838.10, the Index would have to fall to a closing level of 3419.05 before your capital would be at risk, a level not seen since early 2003. However, if it does fall below 50% you could lose some or all of your initial capital. Please also remember that past performance is not a guide to future performance.

9.  No annual management charges

Unlike investment funds, the charges for creating and managing kick out plans are already taken into account so there are no annual management charges which come out of the headline return. The costs associated with the management of funds happens each and every year (in both actively managed and tracker funds), which may help to explain the number of funds which fail to outperform the FTSE 100 Index or other benchmark, especially over a five or six year period. This ongoing cost is not a feature of kick out plans. Most kick out investments will though have an initial charge, normally up to a maximum of 3%.

10. A disciplined approach

Finally, the mechanics of these investments removes the need for the investor to worry about when to come out of the market since the decision is made for them by the pre-determined market conditions required for the plan to mature or it simply comes to the end of the plan term. Should the plan mature, the investor then has the opportunity to reassess their options based on the market conditions at that time.

ISA friendly

All of the kick out plans offered through Fair Investment Company are available to individuals as a New ISA up to the current limit of £15,240 (2016/17 tax year) and will also accept transfers from both Cash ISAs and Stocks & Shares ISAs (as well as non-ISA investments). Since these investments are normally offered for a limited period, always note any New ISA or ISA transfer application deadlines.

Understand counterparty risk

One of the main differences with structured investment plans when compared with other types of investments, such as funds or investment trusts, is that your capital is used to purchase securities and it is these securities which are designed to produce the stated returns on offer. These securities are normally issued by a bank which means that your investment is held with a single institution rather than split between a number of companies, as it would be within an investment fund. This means the risk of the bank becoming insolvent and therefore unable to repay your original investment along with any stated returns becomes a factor to consider – this is known as counterparty risk. Since the counterparty is usually a bank, the credit rating is normally available so a view can be taken on the potential risk involved. There are also plans which aim to reduce this counterparty risk by spreading it across a number of institutions.

Latest selections

Kick out investment plans offer the potential for high returns balanced with conditional capital protection, with our latest selections offering a wide range of counterparties, collateralised versions as well as ‘defensive’ plans giving investors plenty of choice. We also have a number of kick out investments for our existing customers and those more experienced investors where you will find a range of dual Index plans which offer a higher risk versus reward, with current headline returns of up to 14% after 12 months.

 

Click here for our latest kick out investment plans »

Click here for our latest defensive kick out investments »

Click here for our experienced investor section »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. Always remember to check whether any charges apply before transferring an ISA.

Kick out investment plans are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The past performance of the FTSE 100 Index is not a guide to its future performance.

Experienced investor income and growth selections

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At Fair Investment Company there are a large number of our investors who decide to invest through us again and again, which is one of the reasons why for the last three years, our experienced investor section has risen in popularity. Whether this is reinvesting investments that have matured, adding new money to their investment portfolio, or a combination of the two, this section has proved popular with both new and existing customers. For this reason we will be bringing you a regular article covering some of the most popular investments featured in the section. Today we start with one income and one growth selection.

A wider range of investment selections

Designed to complement our range of savings and investment ideas, our experienced investor section was created to enhance our overall offering by featuring a wider range of innovative investment products. Aimed at both existing investors and those new to Fair Investment, the section is aimed at making it easier for you to find and compare the latest income and growth investment opportunities, whilst also giving you plenty of investment ideas and product selections to help you identify whether they meet your needs.

Fixed term investments

Many of our investors decide that an investment with a fixed term is the right way forward, which is why our most popular type of investment is the structured investment plan. These plans offer a defined return for a defined level of risk, thereby offering a more predetermined level of risk versus reward than many other types of investment.

Investment selections

Listed in the experienced investor section is our selection of plans whose performance will depend on a wider range of underlying investments, be this indices from the US or Europe as well as the UK, a blend of more than one index or perhaps a specific number of stocks targeted at a benchmark or sector.

Risk versus reward

As such the knowledge and experience required to review their risk versus reward and their potential as an investment opportunity is considered higher than for some of our other investment plans. Therefore these would not be appropriate for someone new to this type of product or new to investing, but rather are designed for customers who have already invested in a similar product or who fully understand and have experience of putting their capital at risk.

Who is an experienced investor?

Since Fair Investment does not give advice, we feel there are certain investments which should only be considered if this knowledge and experience can be established and although there are no formal set criteria, the following are examples of someone who might be considered an experienced investor:

  1. An existing customer who has invested in a capital at risk product
  2. A new customer who has, in the last 5 years, held a capital at risk investment
  3. A new customer who has, in the last 5 years, held a structured product

Since an assessment of appropriateness forms part of our application process, all investors into any of the plans listed in this section will need to show that they have the necessary knowledge and experience by confirming they fit into one of the above or similar and we may need to obtain further details from you in order to confirm this.

Latest selections

With the potential for double digit growth returns and high income yields, this section is aimed at more experienced investors who are looking for a wider selection of top income and growth ideas and who are prepared to take a higher level of risk. Here we take a look at two of our current selections, one income and one growth.

Income selection

Mariana FTSE S&P Range Income Plan

The Mariana FSTE S&P Range Income Plan offers up to 7.50% each year based on the performance of the FTSE 100 Index and the S&P 500 Index (made up of 500 of the largest companies in the US). Each Index is measured at the start of the plan, and then again at the end of each quarter. If both Indices are within the range of 70% and 130% of their starting level (i.e. they can fall or rise by up to 30%), a 1.875% income payment is made. If either index is outside of this range, no payment is made for that quarter.

The plan also offers some capital protection against the UK and US markets falling since your initial investment is returned in full unless one or both indices falls by 40% or more, measured at the end of the fixed term only. If this does occur, your capital will be reduced by 1% for each 1% fall of the worst performing index, so you could lose some or all of your initial investment.

Fair Investment view: “If you are looking for a high level of income and do not think either the UK or US markets will rise or fall by more than 30% over the medium term, this plan could be a timely opportunity whilst the quarterly payment frequency is likely to appeal to most income seekers. There are few investments out there offering up to 7.50% income whilst the 40% barrier for both indices offers investors some capital protection against falling markets.”

Click here for more information »

 

Growth selection

Meteor Dual index Kick Start Plan

The Dual Index Kick Start Plan from Meteor is a fixed term investment that will mature early or ‘kick out’ at the end of each year, depending on the performance of the FTSE 100 Index and the EURO STOXX 50 Index (made up of the 50 leading blue chip companies in the Eurozone). If the values of both indices at the end of each year are at or above their values at the start of the plan, investors will receive 13.25% at the end of year one, or 13.25% plus an additional 10% for each year thereafter (not compounded).

If one or both Indices close below the required level each year, no growth return will be paid and your initial investment will be returned in full unless one or both Indices has fallen by more than 40% at the end of the plan. If it has, your initial capital would be reduced by 1% for each 1% fall of the worst performing Index, so you could lose some or all of your investment.

Fair Investment view: “Investors in search of the potential for high returns may find the opportunity for 13.25% growth after just 12 months along with a full return of capital, to be a compelling one. Depending on your view of the UK and European markets, an investment that offers the potential for such high growth returns even if the markets stay relatively flat, could be worth a closer look.”

Click here for more information »

 

Keep visiting for the latest plans

Changes to stock market conditions bring with them new investment trends and opportunities. Structured investment plans can often be well placed to capture some of these opportunities and so there are a regular flow of new investment ideas on offer and we make regularly changes to the investment plans listed in the section. These plans are normally only available for between four to six weeks and since they can be very popular, some do close early because they have been oversubscribed. Therefore keep visiting in order to seek out the latest offers.

Visit the Experienced Investor section »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

The plans detailed in this article are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. Growth on your investment is not guaranteed and there is a risk of losing some or all of your initial investment. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The past performance of the FTSE 100 Index, the EURO STOXX 50 Index and the S&P 500 are not a guide to their future performance.

How to achieve 10%+ growth returns, even if the market goes down

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Last updated: 05/01/2016

Although there are many reasons why investors ultimately decide to go ahead and invest or not, timing the stock market is one of the most commented areas in investor behaviour. So what market conditions lead us to consider whether now is the right time to invest or not? Perhaps two of the most common are when markets are trading at historically high levels, and when markets are particularly volatile. Therefore should both of these market conditions prevail at the same time, which we have experienced during 2015, then the self-questioning around whether to invest can increase significantly.

With this in mind, we take a look at a selection of investments that can still achieve 10%+ growth returns, even if the underlying investment has only risen by a very small amount or, in some cases, has even gone down slightly.

Popular in all markets?

By combining the ability to produce high growth returns, along with some capital protection against a falling market, these kick out investment plans offer a fairly unique blend of risk versus reward which has the potential to appeal to investors in a wide range of prevailing investment conditions. Although notably this type of investment has proved popular when markets are low (on the basis that the investor considers it more likely that the index will rise), these plans have also generated particular interest when markets are at historically high levels, as they have been for periods during 2015.

The potential for high returns

Whenever investors are considering when to invest and where to put their capital, perhaps the most appealing feature is the potential return on offer. All of the investments covered below offer a minimum of 10% for each year invested (not compounded). On the basis that a 7% return on your capital could be considered an investment level return, these are considered to offer the potential for high growth returns.

Example – potential 10.0% after just 12 months…

“The FTSE/STOXXX Defensive Kick Out Plan from Focus offers 10.0% for each year invested (not compounded) provided the value of the FTSE 100 Index and the Euro STOXX 50 Index (made up of the 50 leading blue chip companies in the Eurozone) are at or above a specified level at the end of each year. If either or both Indices close below the required level each year, no growth return will be paid and your capital is at risk if one or both Indices has fallen by more than 40% at the end of the plan, in which case you could lose some or all of your investment.

Depending on your view of the UK and European markets, this plan could offer a compelling combination of high growth potential along with some capital protection should markets fall.”

Click here for more info »

 

Returns even if the market stays relatively flat

Many kick out investments are designed to provide returns even if the market has stayed relatively flat. This means that even if the stock market has only gone up by a small amount, you would still receive the full growth return. So if you’re not convinced the markets will rise in the future and yet still wish to achieve double digit returns, the opportunity to beat the stock market in conditions such as these could be a compelling investment story, and perhaps helps to explain why this type of investment has proved particularly popular with our investors.

Example – potential 10.0% even if the FTSE only rises a little

“The Enhanced Kick Out Plan from Investec will return 10.0% for each year invested (not compounded) provided the value of the FTSE 100 Index at the end of each plan year is higher than its value at the start of the plan (subject to averaging). If the FTSE is lower at the end of every year, no growth will be achieved and your initial investment is returned in full unless the FTSE 100 Index falls by more than 50% during the term, in which case you could lose some or all of your initial investment.

This plan is one of our best selling growth investments and the potential 10.0% on offer from this latest issue is its highest headline return seen since the start of 2013.”

Click here for more info »

 

Double digit returns even if markets fall slightly

There are also a number of kick out plans that will provide double digit growth returns even if the underlying investment(s) falls slightly, for example up to 15% or 20%. These so called ‘defensive’ kick out plans thereby cater for a wider range of investor views as to what could happen to the stock market in the coming years. Whilst stock markets remain at what are historically still relatively high levels, this can prove to be a popular feature.

Example – potential 12.0% each year, even if markets fall up to 20%

“The Investec Dual Index Step Down Kick-Out Plan offers 12.0% for each year invested (not compounded) provided the value of the FTSE 100 Index and the Euro STOXX 50 Index (made up of the 50 leading blue chip companies in the Eurozone) are above a specific level at the end of each year, compared to their values at the start of the plan. The required levels are 100% at the end of year two, reducing by 5% each year thereafter down to 80% in the final year.

If either or both Indices close below the required level each year, no growth return will be paid and your initial investment will be returned in full unless one or both Indices has fallen by more than 50% during the term of the plan. If this does occur, your capital is at risk depending on the worst performing Index and so you could lose some or all of your investment.”

Click here for more info »

 

Some capital protection from a falling market

When comparing the risk versus reward of any investment it is important to understand the circumstances when your initial capital could be lost. With kick out investments your original capital is returned if the plan kicks out, but should this not occur then typically your capital will be returned provided the underlying investment has not fallen below a certain amount, normally a percentage of its value at the start of the plan.

To put this into context, for a plan which offers a return of capital unless the FTSE falls by more than 50%, then based on this morning’s (27/10/2015) opening value of 6,471.0, the Index would have to fall to a closing level of 3,235.5 before your capital would be at risk, a level not seen since 1995. However, if it does fall below 50% you could lose some or all of your initial capital. Please also remember that past performance is not a guide to future performance.

Understanding counterparty risk

One of the main differences with structured investment plans when compared with other types of investments, such as funds or investment trusts, is that your capital is used to purchase securities and it is these securities which are designed to produce the stated returns on offer. These securities are normally issued by a bank which means that your investment is held with a single institution rather than split between a number of companies, as it would be within, for example, an investment fund.

This means the risk of the bank becoming insolvent and therefore unable to repay your original investment along with any stated returns becomes a factor to consider – this is known as counterparty risk. Since the counterparty is usually a bank, the credit rating is normally available so a view can be taken on the potential risk involved. There are also plans which aim to reduce this counterparty risk by spreading it across a number of institutions.

Defined return, defined risk

One of the main features of kick out investments is that the potential returns on offer are stated up front, and so are known before you commit your capital. This allows the investor to consider the potential upside in the context of the amount of risk they are taking, since you know at the outset exactly what needs to happen in order to achieve any stated returns as well as a return of your initial investment. This can then be used to make an informed decision about whether to proceed or not by comparing the defined return and defined risk with alternative investments.

Fair Investment view

Commenting on kick outs as a potential plan to consider, Oliver Roylance-Smith, head of savings and investment at Fair Investment Company Limited, said: “With markets continuing to make investors think very carefully before committing their capital, kick out plans have proved to be a popular choice by offering an often compelling balance of risk versus reward”.

He continued: “Although they should be considered fixed term plans, the opportunity to mature early, sometimes in as little as 12 months, is clearly an appealing feature for both savers and investors. Combined with the potential for high investment returns, even if the market stays relatively flat or in some cases even goes down, and it is understandable why this type of investment could be seen as an attractive opportunity in any investment climate, but especially when markets continue to trade at historically high levels.”

Latest selections

Click here for the latest kick out investments »

Click here for the latest defensive kick out investments »

Click here for our experienced investor section »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment depends on your individual circumstances and is based on current law which may be subject to change in the future. Always remember to check whether any charges apply before transferring an ISA.

Kick out investment plans are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is also a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The past performance of individual shares, the FTSE 100 Index and the EURO STOXX 50 Index is not a guide to their future performance.

Top 10 reasons to consider Kick Out investment plans now

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Last updated: 10/11/2015

Whilst the stock market remains as volatile as ever, there is one type of investment plan that continues to be a popular choice with our investors. Kick out plans offer a defined return for a defined level of risk, which combined with the opportunity to mature early seems to make them particularly sought after in the current climate. Whilst many investors find it harder to commit when markets are seemingly more unpredictable than normal, we have seen a recent increase in the number of new investments into this type of plan and since they are available as a capital protected deposit or a capital at risk investment, have become popular with both savers and investors. With this in mind, we give you our Top 10 reasons to consider a kick out plan.

Defined return, defined risk

With kick out plans the potential returns on offer as well as what needs to happen to provide these returns is known up front, before you commit your capital – a defined return for a defined level of risk. The investor therefore has the benefit of knowing at the outset the conditions that need to be met in order to provide the stated returns. This can be used to make an informed decision about whether to invest or not.

Early maturity

These plans have a maximum fixed term or normally six years, but the term ‘kick out’ refers to their ability to mature early depending on the movement of the underlying investment, such as the FTSE 100 Index. Plans that have the ability to mature early thereby providing an attractive level of growth along with a full return of your initial capital have proved popular with investors in all types of markets.

Potential for high returns

In addition to the opportunity for early maturity it is no doubt the potential for high growth returns that contribute to the ongoing popularity of kick out plans. With a number of plans offering the potential for double digit returns for each year invested (not compounded), the opportunity can be a compelling one, especially since what has to happen to the markets in order to provide these returns is known at outset.

Return on investment even if the market stays flat

A small number of plans offer returns only if the market goes up slightly but the majority offer the potential for a competitive growth return (up to 10.0%) even if the stock market stays the same. So if you’re not convinced the markets will rise in the future and yet still wish to achieve stock market level returns, this could be a compelling investment story and is perhaps why this type of investment has proved particularly popular while the FTSE still remains at what are historically high levels.

Click here to compare kick out investment plans »

Potential to beat the market

Should a kick out plan be designed to mature early provided the level of the FTSE 100 Index (or other underlying investment) at the end of each year is higher than its value at the start of the plan, then provided the Index has gone up, even if this is by a small amount, you will receive the headline return along with a full repayment of your initial capital. If the stock market had only risen by a very small amount then it is likely that this type of investment would have outperformed the market.

Investment level returns even if the market falls slightly

There are also kick out plans that will provide competitive growth returns even if the underlying investment falls slightly, for example up to 10% or 15%. These so called ‘defensive’ kick out plans thereby cater for a wider range of investor views as to what could happen to the stock market in the coming years. With current plans offering the potential for double digit returns, and whilst the FTSE has remained at historically high levels, this has proved to be a popular feature.

Click here to compare defensive kick out investment plans »

Some capital protection from a falling market

Your original capital is returned if the plan kicks out but should this not occur, typically your capital will be returned provided the underlying investment has not fallen below a certain amount, which is normally a percentage of its value at the start of the plan. To put this into context, for a plan which offers a return of capital unless the FTSE falls by more than 50%, then based on this morning’s opening value of 5,958.9, the Index would have to fall to a closing level of 2,979.5 before your capital would be at risk, a level not seen since 1995. However, if it does fall below 50% you could lose some or all of your initial capital. Please also remember that past performance is not a guide to future performance.

Fully capital protected options

Some kick out plans are also available with full capital protection, known as structured deposits. These therefore offer the potential for returns which are higher than those currently available from the more traditional fixed rate bond as well as Financial Services Compensation Scheme eligibility up to the prevailing deposit limits (currently £85,000 per individual per institution, reducing to £75,000 from 1st January 2016 onwards). However, it should be remembered that unlike fixed rate bonds the returns on these are not guaranteed.

Click here to compare capital protected kick out plans »

No annual management charges

Unlike investment funds, the charges for creating and managing kick out plans are already taken into account so there are no annual management charges which come out of the headline return. The costs associated with the management of funds happens each and every year (in both actively managed and tracker funds), which may help to explain the number of funds which fail to outperform the FTSE 100 Index or other benchmark, especially over a five or six year period. This ongoing cost is not a feature of kick out plans. Most kick out investments will though have an initial charge, normally up to a maximum of 3%.

Tax efficient – New ISA friendly

In addition to non-ISA investments, all of the kick out plans offered through Fair Investment Company are available to individuals as a New ISA up to the current limit of £15,240 (2015/16 tax year) and will also accept transfers from both Cash ISAs and Stocks & Shares ISAs. Please note that the tax treatment of ISAs depends on your individual circumstances and legislation which are subject to change in the future.

Understand counterparty risk

One of the main differences with structured investment plans when compared with other types of investments, such as funds or investment trusts, is that your capital is used to purchase securities and it is these securities which are designed to produce the stated returns on offer. These securities are normally issued by a bank which means that your investment is held with a single institution rather than split between a number of companies, as it would be within an investment fund. This means the risk of the bank becoming insolvent and therefore unable to repay your original investment along with any stated returns becomes a factor to consider – this is known as counterparty risk. Since the counterparty is usually a bank, the credit rating is normally available so a view can be taken on the potential risk involved. There are also plans which aim to reduce this counterparty risk by spreading it across a number of institutions.

Fair Investment view

Commenting on kick outs as a potential plan to consider, Oliver Roylance-Smith, head of savings and investment at Fair Investment Company Limited, said: “With markets continuing to make investors think very carefully before committing their capital, kick out plans have proved to be a popular choice by offering an often compelling balance of risk versus reward”.

He continued: “Although they should be considered fixed term plans, the opportunity to mature early, sometimes in as little as 12 months, is clearly an appealing feature for both savers and investors. Combined with the potential for high investment returns, even if the market stays relatively flat or in some cases even goes down, and it is understandable why this type of investment could be seen as an attractive opportunity in any investment climate, but especially when markets continue to trade at historically high levels.”

Latest selections

Kick out investment plans offer the potential for high returns balanced with conditional capital protection, with our latest selections offering a wide range of counterparties, collateralised versions as well as ‘defensive’ plans giving investors plenty of choice. We also have a number of kick out investments for our existing customers and those more experienced investors where you will find a range of dual Index plans which offer a higher risk versus reward, with current headline returns of up to 15% after 12 months.

Click here for the latest kick out investments »

Click here for the latest defensive kick out investments »

Click here for the latest kick out deposit plans »

Click here for our experienced investor section »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment depends on your individual circumstances and may change. Make sure you check whether any charges apply prior to transferring any existing investment.

Although structured deposit plans are capital protected there is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In this event you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS), depending on your individual circumstances. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The past performance of the FTSE 100 Index is not a guide to its future performance.

Kick out investment plans are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The past performance of the FTSE 100 Index is not a guide to their future performance.

Experienced investors – our latest selections…

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Updated: 29/09/2015

Here at Fair Investment Company there are a large number of our investors who decide to invest through us again and again. Some of our reviews tell us that this has something to do with our excellent customer service and the quality and relevance of our wide range of savings and investment products. This is also why in late 2012, we launched our experienced investor section. Here we take another look at what is driving more and more new and existing investors to these innovative investment ideas as well as give you some of our current income and growth selections.

Existing investors – the inspiration

As a company, we have always looked at ways of providing innovative savings and investment ideas, which has often led to offering alternative opportunities alongside more traditional ways to save and invest. Initially inspired by a growing number of existing investors who were seeking new investment ideas, our experienced investor section is now in its third year and continues to enhance our overall offering by featuring a range of innovative investment products.

Fixed term investments

Many of our investors, both new and existing decide that an investment with a fixed term is the right way forward. This is why our most popular type of investment is the structured investment plan. These plans offer a defined return for a defined level of risk, thereby offering a more predetermined level of risk versus reward than the better known investment fund. The return on offer is usually dependent on the performance of the stock market with the majority of plans being linked to an investment index such as the FTSE 100 Index, or a small number of listed shares, normally well known FTSE 100 shares.

A wider range of investment selections

Designed to complement our broader range of savings and investment ideas, our experienced investor section is aimed at making it easier for you to find and compare the latest income and growth investment opportunities whilst also giving you plenty of investment ideas and product selections to help you identify whether they meet your needs.

This is where the experienced investor section offers additional investment opportunities, available to both new and existing customers. Listed here is our selection of plans whose performance will depend on a wider range of underlying investments, be this the FTSE 100 Index or indices from the US or Europe, a blend of more than one index or perhaps a specific number of stocks targeted at a benchmark or sector.

Who is an experienced investor?

As such the knowledge and experience required to review them as a potential investment opportunity is considered higher than for our other investment plans. Therefore these might not be appropriate for someone new to this type of product or new to investing but rather are designed for customers who have already invested in a similar product or who fully understand and have experience of putting their capital at risk.

Since Fair Investment does not give advice, we feel there are certain investments which should only be considered if this knowledge and experience can be established and although there are no formal set criteria, the following are examples of someone who might be considered an experienced investor:

1.  An existing customer who has invested in a capital at risk product

2.  A new customer who has, in the last 5 years, held a capital at risk investment

3.  A new customer who has, in the last 5 years, held a structured product

Since an assessment of appropriateness forms part of our application process, all investors into any of the plans listed in this section will need to show that they have the necessary knowledge and experience by confirming they fit into one of the above or similar and we may need to obtain further details from you in order to confirm this.

Latest selections

With the potential for double digit growth returns and high income yields, this section is aimed at more experienced investors who are looking for a wider selection of top income and growth ideas and who are prepared to take a higher level of risk. Here we take a closer look at some of our current selections.

Income selection

Potential for 8.8% p.a. income, quarterly payments

The Focus Dual Index Quarterly Contingent Income Plan offers up to 8.8% each year based on the performance of the FTSE 100 Index and the EURO STOXX 50 Index, the 50 leading blue chip companies in the Eurozone. A 2.2% payment is made at the end of each quarter provided both indices close at or above 80% of their values at the start of the plan. If one or both Indices are below 80%, no income will be paid for that quarter.

The plan also offers some capital protection against falling stock market since your initial investment is returned in full unless one or both indices falls by more than 40%, measured at the end of the fixed term only. If this does occur, your capital will be reduced by 1% for each 1% fall of the worst performing index, so you could lose some or all of your initial investment.

Fair Investment view: “If you are looking for a high level of income and do not think either the UK or Eurozone markets will fall by more than 20% over the medium term, this plan could be a timely opportunity, whilst the quarterly payment frequency is likely to appeal to most income seekers. The plan also has the opportunity to mature early each quarter from year onwards in which case investors will receive their original capital back along with a final income payment.”   Click here for more information »

Growth selections

Potential 15% return after just 12 months

The Dual Index Kick Start Plan from Meteor is a fixed term investment that will mature early or ‘kick out’, depending on the performance of the FTSE 100 Index and the EURO STOXX 50 Index (made up of the 50 leading blue chip companies in the Eurozone). If the values of both indices at the end of each year are at or above their values at the start of the plan, investors will receive 15% at the end of year one, or 15% plus an additional 10% for each year thereafter.

If one or both Indices close below the required level each year, no growth return will be paid and your initial investment will be returned in full unless one or both Indices has fallen by more than 40% at the end of the plan. If it has, your initial capital would be reduced by 1% for each 1% fall of the worst performing Index, so you could lose some or all of your investment.

Fair Investment view: “Investors in search of the potential for high returns may find the opportunity for 14% growth after just 12 months along with a full return of capital, to be a compelling one. Depending on your view of the UK and European markets, an investment that offers the potential for such high growth returns even if the markets stay flat, could be worth a closer look.”   Click here for more information »

Potential 11% annual returns

The Investec Dual Index Step Down Kick Out Plan offers 11.0% for each year invested (not compounded) provided the value of the FTSE 100 Index and the Euro STOXX 50 Index (made up of the 50 leading blue chip companies in the Eurozone) are at or above a specific level at the end of each year, compared to their values at the start of the plan. The required levels are 100% at the end of year two, reducing by 5% each year thereafter down to 80% in the final year.

If either or both Indices close at or below the required level each year, no growth return will be paid and your initial investment will be returned in full unless one or both Indices falls by more than 50% during the plan. If this occurs and one or both Indices are lower than 80% of their starting values at the end of the plan, your initial capital would be reduced by 1% for each 1% fall of the worst performing Index, so you could lose some or all of your investment.

Fair Investment view: “The potential for double digit returns even if the markets go down by up to 20% could be a compelling investment proposition in the current investment climate and this plan is proving popular with our existing investors. So depending on your view of the UK and European markets, this plan could offer a compelling combination of high growth potential, the ability to mature early along with some capital protection should markets fall.”   Click here for more information »

Growing number of investment opportunities

As stock markets around the globe continue to provide a mixture of highs and lows, this section has grown more and more popular since launch and we continue to work hard to expand the depth and range of opportunities that are listed. We hope you find the experienced investor section helpful and easy to use – please do let us know what you think or if you have any questions: email us at [email protected] or call us on 0845 308 2525.

Keep visiting for the latest plans

Changes to stock market conditions bring with them new investment trends and opportunities. Structured investment plans can often be well placed to capture some of these opportunities and so there are a regular flow of new investment ideas on offer and we make regularly changes to the investment plans listed in the section. These plans are normally only available for between four to six weeks and since they can be very popular, some do close early because they have been oversubscribed. Therefore keep visiting in order to seek out the latest offers.

 

Visit the Experienced Investor section »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

The plans detailed in this article are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated. In addition, you may not get back the full amount of your initial investment if the plan is not held for the full term. The past performance of individual shares, the FTSE 100 Index and the EURO STOXX 50 Index is not a guide to their future performance.

ISA Season Selections – Investment ISAs

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With ISA season well and truly under way, this is an important time to consider how best to make use of this valuable tax break and remember, if you do not use your ISA allowance before midnight on 5th April 2015, it is lost forever. With the need to review existing ISAs as well as making sure new investments offer the opportunity for higher returns, we bring you our selection of the best income and growth Investment ISAs the market currently has to offer.

Our Selections

Below we have listed some of our most popular Investment ISA plans, featuring both income and growth investments. With income needs continuing to play a critical role for many investors, the attraction of having tax free income is understandable. Whilst for investors looking for growth, we have a number of plans including those which take a defensive view on the stock market, as well as investments with the opportunity to mature early or ‘kick out’. With the potential for headline returns of up to 13% annual income and 20% growth, we cover a wide range of opportunities.

Defined return, defined risk 

All of the plans detailed offer you a defined return for a defined level of risk, which means that you know the exact terms of the plan prior to investing and exactly what needs to happen in order to provide you with the stated income or growth return. They also include what is known as conditional capital protection, whereby your original capital is returned at the end of the plan term, as long as the underlying investment has not fallen by more than a specified amount, normally 50% of its starting value. As savers continue to face the impact of record low savings rates, this feature could be an attractive option for those considering taking risk with some of their capital.

INCOME ISAs

5.28% fixed income each year, monthly payments

The Enhanced Income Plan from Investec was our most popular income investment during last year’s ISA season and continues to remain a best seller with income investors as well as savers looking for investment alternatives. The main appeal of the plan is that it offers a fixed income of 5.28%, which is paid to you as 0.44% each month regardless of the performance of the FTSE 100 Index. Capital is at risk if the Index drops by more than 50% during the plan and fails to recover by the end of the term, in which case your initial capital will be reduced by 1% for each 1% fall – so you could lose some or all of your initial investment.

Click here for further information » 

7.2% fixed income each year, monthly payments 

The FTSE 5 Monthly Income Plan also offers a fixed income with the current issue offering 7.2% each year, paid to you as 0.6% each month regardless of the performance of the stock market. The higher level of income is due to the return of your capital being dependent on the performance of five FTSE 100 shares – if the value of the lowest performing share at the end of the term is less than 50% of its value at the start of the plan, your initial capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

Click here for further information » 
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Experienced Investor Section Proving Popular

Written by Tags: , ,

Here at Fair Investment Company there are a large number of our investors who decide to invest through us again and again and hopefully this has something to do with our customer service and the quality and relevance of our wide range of savings and investment products. This is also why in late 2012 we launched our experienced investor section. Here we take a closer look at what is driving more and more new and existing investors to this growing selection of investment ideas.

Existing investors – the inspiration

As a company, we have always looked at ways of providing innovative savings and investment ideas, which has often led to offering alternative opportunities alongside more traditional ways to save and invest. And as we approach our 15 year anniversary of helping a wide range of customers, we have never been more committed to finding ways to improve our site and make it easier for you to find and compare the latest investment offers, whilst also giving you plenty of ideas and product selections to help you identify whether they meet your needs.

Inspired by a rapidly growing number of existing investors who were seeking new investment ideas, our experienced investor section is now in its third year and continues to enhance our overall offering by featuring a range of innovative investment products. With the potential for very high growth returns and double digit income, this section is aimed at more experienced investors who are looking for a wider selection of top income and growth ideas and who are prepared to take a higher level of risk.

Fixed term investments

Many of our investors, both new and existing decide that an investment with a fixed term is the right way forward. This is why our most popular type of investment is the structured investment plan.

These plans offer a defined return for a defined level of risk, thereby offering an increased level of risk versus reward than better known investment fund. The return on offer is usually dependent on the performance of the stock market with the majority of plans available through Fair Investment being linked to an investment index such as the FTSE 100 Index, or a small number of listed shares, normally well known FTSE 100 shares. 
Read more