New Protected Equity Bond offered by Nationwide
A new six-year Protected Equity Bond has been launched by Nationwide Building Society. The new Bond - available as both deposit and ISA options - pays a minimum 9% gross return (1.44% AER), plus potential for further stock market linked growth at the end of six years.
Customers who invest in the Protected Equity Bond also have the opportunity to take out an exclusive one-year fixed rate Combination Savings Bond paying 3.50% gross p.a./AER (annual interest).
Six-year Protected Equity Bond - a chance for stock market linked growth
Minimum return: 9% gross (1.44% AER) at the end of six years.
Maximum potential return: 100% of any growth of the FTSE 100, EuroSTOXX 50 and S&P 500 indices, subject to final year averaging, up to 50% gross (6.99% AER) of the original investment amount.
The Protected Equity Bond may be ideal for customers who are attracted to the potential rewards of investing in stock markets, but are worried about the associated risks. The Protected Equity Bond is a deposit-based plan which offers returns linked to the performance of the selected indices but it does not invest directly in company shares or investment funds. This means balances are protected from any negative stock market movement.
The new Protected Equity Bond is the Stock Market Linked Savings Bond 4 provided by Legal & General (L&G).
Cash ISA option
Nationwide provides access to a range of ISA options and the Protected Equity Bond is available both as Deposit Plan and an ISA Plan.
Customers may also transfer-in their previous years' cash ISA allowances, including those held with other providers, without it counting towards their current year allowance. Having the option to save previous years' cash ISA balances in a Protected Equity Bond ISA means that customers can potentially benefit even more from higher returns compared to deposit-based cash ISAs.
One-year fixed rate Combination Savings Bond
Return (annual interest): 3.50% gross p.a./AER.
Return (monthly interest): 3.45% AER, 3.40% gross p.a.
The Combination Savings Bond continues to be exclusively available for customers who invest in the Protected Equity Bond at the same time and could help savers make the most of their money in the current low interest rate environment.
The minimum investment of the Combination Savings Bond is £3,000 and the same amount or more must be invested in a Protected Equity Bond. The maximum investment is £2,000,000.
Robin Bailey, Nationwide's divisional director for savings and investments, said: "Some customers think about investing in the stock markets but are put off by the associated risks. However, with the Protected Equity Bond, you combine the potential returns associated with stock and shares with the same security as any other bank or building society account that you have.
"What's more, the Protected Equity Bond is available both as a Deposit Plan and as an ISA Plan. This is positive for investors because we know that the majority of consumers would consider a cash ISA that benefits from the potential growth of investments but without the risk of losing their original investment3. Customers with cash ISAs from other providers can also transfer their balance to a Protected Equity Bond.
"Furthermore, the one-year fixed rate Combination Savings Bond continues to be available to those taking out a Protected Equity Bond at the same time. At seven times greater than the current Bank of England Base Rate, the Combination Savings Bond pays a generous return and provides a guaranteed interest rate."