Beginner's guide to investing: Why you should avoid structured products

By Deputy editor Tim Bennett Feb 25, 2011

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  1. sonia

  (19 February 2011, 08:42PM)  Complain about this comment

  Dear Tim
  
  First time I saw your video on Why An ISA.
  Very concise but informative.
  Good work
  
  Thanks
  Sonia

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  2. John

  (22 February 2011, 11:09AM)  Complain about this comment

  Thoroughly useful presentation for newcomers to things financial. Without falling into the 'information overload' trap the relaxed but logical style makes assimilation easy. By fore-arming the unwary, costs should be containable & costly mistakes reduced.

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  3. David

  (22 February 2011, 07:03PM)  Complain about this comment

  Brilliantly clear and simple explanation - Tim, you should be a teacher!
  
  If only children learnt lessons exactly like this at school.

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  4. Very satisfactory

  (25 February 2011, 03:17PM)  Complain about this comment

  This is quite good, Tim!
  
  One fenced subject,
  and most things to be taken account are there.
  
  Maybe you should have left on the earnings side out the bank accounts.
  
  If the current policy of BoE prevails,
  and is seen to be established for next 10 years ,
  inflation linked bonds,
  may be nonexistent .
  
  
  
  

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  5. Bapodra Investments

  (25 February 2011, 09:30PM)  Complain about this comment

  Tim, very good guide. However you forgot one very important point which I am very surprised you did not mention. I have recently come across Investec's structured products for the FTSE 100 and in the small print it states that it even if the FTSE finishes higher at the end of the five year period it does not mean you will get the bonus as it works on the average over the final 12 months of the five year plan. So for example you enter in 2011 with the FTSE at 5000. In 2016 the FTSE is 5100. However if during the final 12 months of this plan the average for the FTSE was say 4950 even though it finished at 5100 or higher than 5000 which was the starting point then you would not be eligible for the bonus. This was in the very small, minicule print of the Investec literature.
  
  You may want to add this to the guide as it is a very important point.

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  6. Tim Bennett

  (26 February 2011, 11:34AM)  Complain about this comment

  Bapodra Investments - good point! It's essential to read the small print I agree, or better still just avoid some of these products altogether.

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  7. Tim

  (26 February 2011, 11:36AM)  Complain about this comment

  Bopodra Investments - good point. I didn't have that product specifically in mind but you reinforce the importance of reading the small print. Better still, buy something simpler.

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  8. Bapodra Investments

  (26 February 2011, 02:39PM)  Complain about this comment

  Tim, totally agree. Also the 50% or in some cases 65% bonus figure seems fantastic. However if you annualise this then it is only 10 - 13% per annum. Well an ETF or a particular share can easily acheive this. Also if you put dividends into the equation then 10-13% per annum is not actually that fantastic.
  
  My advice is the same as yours, stay away from structured products. The investor rarely makes any money. Think about it. They mainly market and release these structures products for the FTSE when it is near its highs historically. When the FTSE was near its bottom in 2008 or in the 4000's, why were these products not released then? The answer is they have less chance of making money. At the moment you could argue that there is more chance of the FTSE being less than 6000 than above in five years time so it is not investing, it is gambling. Gambers always lose money in the long term. The house always wins. Look at Las Vegas.

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  9. gft donny

  (26 February 2011, 04:07PM)  Complain about this comment

  Hi Tim, I have read many articles over the recent past on this subject and never really understood the finer points until seeing your video.
  
  I am now much more clued up now with your point by point - conscise - explanation.
  
  I will cetainly think twice before investing in this product.
  
  Keep up the good work.

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  10. Happy Adviser

  (10 March 2011, 11:26AM)  Complain about this comment

  Plenty of structured products were launched in 2008. Or indeed '03/'04 when the FTSE was also relatively low. Less products get launched when equities are near their high because of low volatility. And canny investors realise that they could get great rates and limit the potential downside (not eliminate it completely) do very well out of them.

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