Wed, 23/07/2014 - 16:05
Investors in the latest range of maturing Investec structured deposits earned 6.46 per cent per annum on average, which is over 2.5 per cent higher than the average cash account.
Investec’s structured deposits are designed as an alternative to cash savings, as they are covered by the Financial Services Compensation Scheme and do not put a client’s initial investment at risk.
A recent study by Investec found that wealthy retirees and pre retires are increasingly investing in these products to boost their income at a time when the Bank of England base rate remains at an all-time low.
Deposit Investors received on average 19.38 per cent return over an average investment period of 2.86 years. The returns come at a time when over 63 per cent of investors think three per cent is a reasonable return for cash deposits, showing investors could be missing out by not choosing a product that offers significant upside with capital protection.
Between June 2009 and June 2014, Investec’s 5 Year Deposit Plan returned 5.97 per cent per annum above the average five-year fixed-rate deposit available at the time of investment.
The Kick-Out Deposit Plan returned 2.34 per cent per annum above the average five-year fixed-rate deposit whilst locking away investors’ money for less than half this period, at 1.82 years on average across the 44 plans. Plans that offer a “kick-out” feature are well received by investors with research showing that 84 per cent of investors are comfortable with or would be happy with an investment that matures early if it has met its target investment objective, rising to 91 per cent for those under 35-years-old.
Gary Dale, head of intermediary sales at Investec Structured Products, says: “The benefits of structured deposits as real alternatives to cash savings rates and fixed rate bonds are clearly visible in our June maturity figures. As savings accounts continue to pay a pitiful rate of interest both advisors and savvy investors are realising that structured deposits offer a similar level of protection with a proven record of substantially higher returns. These investors are increasingly pre- and post-retirees, putting a proportion of their pension savings into structured deposits, providing an invaluable form of income at a modicum of additional risk.”
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