Protected Investment Bond - too good to be true?

[dannyjennings]

Hey all,

New to the forum but a long time lurker. Some really great insight from you all on a broad range of topics, very helpful for a less sophisticated individual like myself.

Anyway, I wanted to invest around 10k in one of these tracker bond type products. Lock it in for a few years and hopefully get a return better than what the banks are offering for their fixed term deposit acccounts.

I came across this product, the Protected Income Bond 21 from Blackbee stockbrokers. It ticks all the boxes.

blackbee.ie/wp-content/uploads/2015/12/Protected-Investment-Bond-21-BlackBee-Investments.pdf


-100% capital protection
- 10% return minimum over 4.5 years (much better than anything on the market as far as I can see)
- minimum iinvestment only 10k

Are there significant risks that I am missing? Why does every other investor with 10k to put away for 4.5 years not invest in this and get a great return comparted to what the retail banks are offering?

I would like to note that I have never invested in any type of product before, I am just keen to get a better return for my 10k than the banks are currently offering and was told that this type of product might offer me that.

Any comments would be great.

thanks

 

[Brendan Burgess]

Most of these tracker bonds have catches and you have to study the documents in detail to find them.

This one has a fee of 3.5%, so immediately your guaranteed return is reduced to 6.5%.

I have not heard of any of these guys before, so you would have to research them before committing any money.

And there are a lot of warnings:

 

[dannyjennings]

Most of these tracker bonds have catches and you have to study the documents in detail to find them.

This one has a fee of 3.5%, so immediately your guaranteed return is reduced to 6.5%.

I have not heard of any of these guys before, so you would have to research them before committing any money.

View attachment 1398

And there are a lot of warnings:

View attachment 1400

Thanks Brendan.

From reading the docs I was a little confused as to who the reference entities actually were? I have never heard of them.

Are MBIA Inc and Assured Guaranty Corp reliable entities? I think the return is linked to them staying solvent. It is referred to as Credit Risk in the brochure.

 

[Gordon Gekko]

The big risk is credit risk. These entities could go under in a world where banks will no longer be saved by government.

 

[johnny1234]

OP, just check with the Central Bank to see if they are Authorised to sell Financial Product in this country.

 

[Steven Barrett]

If it looks too good to be true, it usually is. There is a relationship between risk and return, the more investment risk, the higher the expected return. If someone offers you something different, there is a catch...and the catch will always effect you, not the provider who will always be paid.

Tracker bonds are poor value for money.


Steven
www.bluewaterfp.ie