UK-based Nationwide Building Society has revealed that it is planning to launch a new tranche of its guaranteed equity bond on October 1, 2007.
The guaranteed equity bond (GEB) is likely to appeal to would-be investors who are concerned about investing in stocks and shares following stock market volatility over recent months and are looking for a home for their savings.
The five-year bond provides a guarantee to return the original investment, plus 10% or up to 60% of any growth, whichever is greater, in the value of the FTSE 100, Nikkei 225 and DJEuroSTOXX 50 indices. For basic and higher rate tax payers, 60% of the growth in the value of the indices is equivalent to 75% before tax.
Robin Bailey, Nationwide’s investments director, said: Despite increased volatility over the last few months, the stock market remains a good place to invest for the long term. Anyone wary about investing will find that a guaranteed equity bond will give them the best of both worlds. Namely, the benefit of potential stock market growth while keeping the capital totally secure with a guarantee to return at least the original amount invested plus a minimum of another 10%.
With Nationwide’s new GEB, investors can now benefit from up to 60% of any potential stock market index growth based on the performance of some of the world’s top companies which are listed on the stock markets of the UK, Europe and Japan. And, with a minimum return of 10% guaranteed over the five-year term, investors will always get back more than they originally put in.