Structured Deposit Accounts
With interest rates on traditional deposit-based accounts having remained low in recent years, Structured Deposit Accounts have become an increasingly attractive option to investors who don’t want to take any risk with their original deposit – but would like a return linked to stock market performance.
Structured Deposit products generally offer a guaranteed return of capital at maturity; irrespective of how the asset class or stock market index has performed.
These products will have a fixed term (e.g. 3-6 years), so it’s important you won’t require access to your investment during this period. If you needed to withdraw your money before the end of the term, it is likely you would not receive back all of the capital invested.
Benefits
• Very low risk
• High level of security – for example, should a UK deposit-taker fall into financial difficultly, as has happened in recent times, the first £85,000 deposited with a Financial Services Authority (FSA) authorised firm is protected under the Financial Services Compensation Scheme (FSCS)
• Potential to earn higher returns than traditional deposit-based accounts
• Benefit from any growth in the stock market without actually investing in it
• Investment term potentially makes Structured Deposits appropriate for medium to longer-term financial needs
• Investment can be held inside a tax-efficient Cash ISA wrapper
Potential drawbacks
• Any money you invest over the £85,000 FSCS limit, with one financial services organisation, would not be covered by the FSCS if they become insolvent
• In order to provide the capital guarantees, the potential returns are usually lower when compared to those potentially available from direct equity investment
Taxation
• Return subject to income tax, the rate of which depends on your tax status. Tax rates are subject to change.
To find out more about any of
the services we’ve mentioned
simply:
- Contact your SFS Financial Adviser
- Call a member of our Client
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