If you seek advice from your Bank you will frequently be sold a structured product, the glossy brochure will promise you the potential uplift in the FTSE100 or other index without risk because at the end of say 5 years, if the market does not perform your original investment will be returned to you
Structured products come in many guises but in general the scheme runs for a fixed term and the purchase of derivatives allows the Provider to offer you exposure to a certain amount of the growth in an index.
An example of a structured product would be a 5 year offer linked to the performance of the FTSE. You will be given full capital protection but the possibility of growth if the FTSE100 rises by a specific percentage.
The schemes can be complex and in the worse case senario the investor has lost access to his money and interest over a significant investment period.
In some instances, the return of the capital at the end of the term does not fall within the scope of the Financial Services Compensation Scheme and is dependant upon the solvency of an organisation called the counterparty
This product is often marketed to low risk investors and in its complexity it is not really suitable for that market.
We strongly recommend you totake independent advice before buyinsg such a product. F or a small fee Nicholls Stevens will review such a product to make sure that it was suited to your needs and meet your attitude to risk