A structured product is generally a fixed-term investment whose pay-out depends on the performance of something else, like a stock market index. They usually tie your money for a certain length of time and can be complex with varying degrees of risk.
Structured products can come in either the form of a structured deposit or structured investment. Structured deposits are savings accounts where the rate of interest you get depends on how the stock market index performs. If the stock market falls then you will usually get no interest at all.
Structured investments are commonly offered by insurance companies and banks. Your money buys two investments – one to protect your capital and another to provide the bonus. The return again depends on how the stock market index performs.
Structured investments and deposits
Structured investments and deposits are sold under many different names such as: Structured Cash ISAs, Growth Deposit plans, Guaranteed Capital Plans, Guaranteed Equity Bonds, Guaranteed Income Bonds, Protected Investment Funds, Guaranteed Stock market Bonds. We can run through each of these to explain how the product works, what the risks are and whether you would be protected by a compensation scheme if things were to go wrong.
How they work
How Structured Deposits work
When you purchase a structured deposit, you make an agreement to invest your money for a set amount of time, often five to six years, in return for a lump sum at maturity. The amount you earn really depends on how well a stock market index such as the FTSE 100 performs.
How Structured Investments work
When you buy a structured investment, you also agree to invest your money for a set amount of time. Some of these products offer you a lump sum depending on the performance of the stock market index.
As with many investments, there are risks associated with structured products and we will discuss these with you when we look at structured investments.
When we meet with you to discuss structured products, we will provide you with key facts so you understand the process. For example, we will discuss what the investment is and how it works, the key risks and the charges.
If you would like to understand more about structured products, then please get in touch.
*Please note: Equity investments do not afford the same capital security as deposit accounts. Your capital is at risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested.