Gold Bond

[tom_tom]

Any thoughts on this one ...good or bad welcome ..thanks
[broken link removed]

- 90% Capital Protection
- Invested in Gold
- 100% Participation in any growth in the Index at Maturity
- Returns added to 100% of amount invested
- Maximum Return: 48.99%
- 5 Year Term
- Access to Capital During the Term
- Summary Risk Indicator 2

 

[messyleo]

Avoid IMO.

"Investors will receive 100% of any growth in the Index at the Final Valuation Date added to the amount initially invested, subject to a Maximum Return of 48.99%. If Gold has increased by 49% or more at the Final Valuation Date, investors will receive no return and will receive back the Capital Protected Amount of 90% of their initial investment "

 

[MrEarl]

In my experience, investments that come with capital guarantees, very rarely give a return worthy of the investment.

 

[tom_tom]

hey thanks for reply ..I read that bit but my understanding the manager can kick out before that happens

Avoid IMO.

"Investors will receive 100% of any growth in the Index at the Final Valuation Date added to the amount initially invested, subject to a Maximum Return of 48.99%. If Gold has increased by 49% or more at the Final Valuation Date, investors will receive no return and will receive back the Capital Protected Amount of 90% of their initial investment "

 

[Marc]

you pay 4% to have credit risk to the bank for 5 years invite additional liquidity risk into your life while the bank places a side bet at the bookies on the price of some chocolate coins (gold).

If the price does well over 5 years you don’t participate in the fun. If it doesn’t you should have probably just bought stocks anyway.

that about sums it up

https://www.slcg.com/

These guys are a great place to study how structured products are actually constructed and marketed in the USA.

They have surprisingly little positive to say about structured products.

They have published research papers

for example this paper concludes that if you pick a structured product at random and you almost always will be better off with a properly constructed stock and bond portfolio

This paper augments the current literature by analyzing the ex-post returns of nearly 18,000 individual structured products issued by 13 brokerage firms since 2007. We construct our structured product index and sub-indices for reverse convertibles, single-observation reverse convertibles, tracking securities, and auto-callable securities by valuing each structured product in our database each day.

The ex-post returns of US structured products are highly correlated with the returns of large capitalization equity markets in the aggregate and individual structured products generally underperform simple alternative allocations to stocks and bonds. The observed underperformance of structured products is consistent with the significant issue date under-pricing documented in the literature

 

[jpd]

Structured products pander to an investor's need to feel secure and to get a guaranteed positive return - these are two mutually exclusive aims but have given rise to a complete industry to cater to the investor's desires, and make a bit (a lot?) of money while doing so.

The products are dressed up as if they are meeting both aims, whereas in reality the only guaranteed outcome is profit for the providers. But that is how capitalism works - if there's a want, someone will provide for it

 

[tom_tom]

thanks ...your comments align with my own experience so we are in agreement ...I am risk adverse with Mortgage paid, pension max'd out and close to maxing out An post too.

so for risk adverse ..what's the alternative to leaving in the bank?
( I accept doing nothing is a risk too)

you pay 4% to have credit risk to the bank for 5 years invite additional liquidity risk into your life while the bank places a side bet at the bookies on the price of some chocolate coins (gold).

If the price does well over 5 years you don’t participate in the fun. If it doesn’t you should have probably just bought stocks anyway.

that about sums it up

https://www.slcg.com/

These guys are a great place to study how structured products are actually constructed and marketed in the USA.

They have surprisingly little positive to say about structured products.

They have published research papers

for example this paper concludes that if you pick a structured product at random and you almost always will be better off with a properly constructed stock and bond portfolio

This paper augments the current literature by analyzing the ex-post returns of nearly 18,000 individual structured products issued by 13 brokerage firms since 2007. We construct our structured product index and sub-indices for reverse convertibles, single-observation reverse convertibles, tracking securities, and auto-callable securities by valuing each structured product in our database each day.

The ex-post returns of US structured products are highly correlated with the returns of large capitalization equity markets in the aggregate and individual structured products generally underperform simple alternative allocations to stocks and bonds. The observed underperformance of structured products is consistent with the significant issue date under-pricing documented in the literature

Structured products pander to an investor's need to feel secure and to get a guaranteed positive return - these are two mutually exclusive aims but have given rise to a complete industry to cater to the investor's desires, and make a bit (a lot?) of money while doing so.

The products are dressed up as if they are meeting both aims, whereas in reality the only guaranteed outcome is profit for the providers. But that is how capitalism works - if there's a want, someone will provide for it

 

[Steven Barrett]

thanks ...your comments align with my own experience so we are in agreement ...I am risk adverse with Mortgage paid, pension max'd out and close to maxing out An post too.

so for risk adverse ..what's the alternative to leaving in the bank?
( I accept doing nothing is a risk too)

Investing in a gold bond product that you have no control over is not risk adverse. They market the product as low risk but that is only because you pay for a 90% return of your own capital. There is nothing risk adverse about the underlying asset.

Invest in some high quality stocks. If you want long term growth over the long term, look at large cap stocks. If the ups and downs are too much, reduce your holding and diversify with other assets.


Steven
www.bluewaterfp.ie

 

[tom_tom]

Thanks ..I fully appreciate the risk attached to a product like this. ..i'm just exploring it as an option.

Equally I've heard the diversity case in the past ..my base view (and I spend roughly a couple of hrs before tax deadline thinking about investments so I've the flak jacket on ..is true diversity is hard to achieve ..when risk assests sell off they do so in unsion....if you have data that shows x going down and Y going up I'd like to see that?

I accept time (recovery) and position size (exposure) are ways to offset risk

Investing in a gold bond product that you have no control over is not risk adverse. They market the product as low risk but that is only because you pay for a 90% return of your own capital. There is nothing risk adverse about the underlying asset.

Invest in some high quality stocks. If you want long term growth over the long term, look at large cap stocks. If the ups and downs are too much, reduce your holding and diversify with other assets.


Steven
www.bluewaterfp.ie

 

[Dave Vanian]

Avoid IMO.

"Investors will receive 100% of any growth in the Index at the Final Valuation Date added to the amount initially invested, subject to a Maximum Return of 48.99%. If Gold has increased by 49% or more at the Final Valuation Date, investors will receive no return and will receive back the Capital Protected Amount of 90% of their initial investment "

I know that the original poster has most definitely got the consensus opinion by now and I'm adding nothing of great value, but I'm actually stunned at how bad this product is. Structured products like this are generally rubbish to benefit the seller rather than the buyer, but the clause that @gravitygirl has quoted above just takes the biscuit.

• If the value of gold goes down, you take the hit, with a maximum loss of 10%.
• If the value of gold goes up, you get a return ... BUT
• If the value goes up by more than 49% you lose 10% of what you invested.

So you can only get a return if the price of gold goes up in a strict range in five years' time! How the fup is anyone supposed to try to predict the price of gold, a notoriously volatile commodity, in five years' time? You'd seriously get better odds gambling.

I actually read the brochure and came to the part about "back-testing". I generally dislike back-testing, as it's possible to analyse historic returns and from that, design a product that would have done well in the past. But this product would have done badly in a majority of scenarios in the past too!

Number of times investors received back between Capital Protected amount of 90% and 100% of Initial Investment: 946 (72.55% of all 5 year periods tested)

I really am stunned at how bad this product is.

 

[tom_tom]

I've got the AAM view for sure ...I'm not expert but I did question the clause below ..the response was this is a liquid investment and the manager can kick out to lock in a gain at any stage ...so if 15-20% is achieved they can lock that in...it doesn't have to run the full term...there is access also ...not sure this is being factored into the critique.

'the value goes up by more than 49% you lose 10% of what you invested'

I know that the original poster has most definitely got the consensus opinion by now and I'm adding nothing of great value, but I'm actually stunned at how bad this product is. Structured products like this are generally rubbish to benefit the seller rather than the buyer, but the clause that @gravitygirl has quoted above just takes the biscuit.

• If the value of gold goes down, you take the hit, with a maximum loss of 10%.
• If the value of gold goes up, you get a return ... BUT
• If the value goes up by more than 49% you lose 10% of what you invested.

So you can only get a return if the price of gold goes up in a strict range in five years' time! How the fup is anyone supposed to try to predict the price of gold, a notoriously volatile commodity, in five years' time? You'd seriously get better odds gambling.

I actually read the brochure and came to the part about "back-testing". I generally dislike back-testing, as it's possible to analyse historic returns and from that, design a product that would have done well in the past. But this product would have done badly in a majority of scenarios in the past too!

Number of times investors received back between Capital Protected amount of 90% and 100% of Initial Investment: 946 (72.55% of all 5 year periods tested)

I really am stunned at how bad this product is.

 

[LDFerguson]

I've got the AAM view for sure ...I'm not expert but I did question the clause below ..the response was this is a liquid investment and the manager can kick out to lock in a gain at any stage ...so if 15-20% is achieved they can lock that in.



the value goes up by more than 49% you lose 10% of what you invested.

I agree with all the negative commentary above and won't bore anyone by adding to it.

Even though I wouldn't touch this with someone else's, I'm vaguely curious about how this "kick out" thing is supposed to work. So some manager (who?) can choose to close down the investment if 15 - 20% growth is achieved. What is the manager's mandate? Are they obliged to close it down at 20%? Why not 30%? Or 40%? Or 48%, just below the point at which you go bust? This sounds more like a game of cards I used to play as a kid - was it 21?

 

[tom_tom]

Ok ..I get it ...I think now mortgage paid , pension and an post maxed ..I'll buy the holiday home in west cork..and enjoy the mid terms there.

I agree with all the negative commentary above and won't bore anyone by adding to it.

Even though I wouldn't touch this with someone else's, I'm vaguely curious about how this "kick out" thing is supposed to work. So some manager (who?) can choose to close down the investment if 15 - 20% growth is achieved. What is the manager's mandate? Are they obliged to close it down at 20%? Why not 30%? Or 40%? Or 48%, just below the point at which you go bust? This sounds more like a game of cards I used to play as a kid - was it 21?

 

[Johnno75]

Gawd, even the product’s name is offputting, as it reminds me of an ACC product I invested in years ago called Solid World Bond. Lost heavily in that one. Wonder if it’s the same folk behind this product.

Anyways, for the avoidance of doubt, I would avoid. If you want to invest in solid gold, there are ample trustworthy suppliers on the Irish market.

 

[tom_tom]

The point has being well made ..if you guys want to naw the carcass be my guess ...even if I made 20k on this ..its <10% of household income and even less of net worth...its barely worth my while

[ QUOTE="Jayom75, post: 1688851, member:
110456"]
Gawd, even the product’s name is offputting, as it reminds me of an ACC product I invested in years ago called Solid World Bond. Lost heavily in that one. Wonder if it’s the same folk behind this product.

Anyways, for the avoidance of doubt, I would avoid. If you want to invest in solid gold, there are ample trustworthy suppliers on the Irish market.
[/QUOTE]

 

[Dave Vanian]

The point has being well made ..if you guys want to naw the carcass be my guess ...even if I made 20k on this ..its <10% of household income and even less of net worth...its barely worth my while

As you're in a strong financial position, invest in a simple low-cost global index-tracking equity fund e.g. a Vanguard global fund or ETF and forget about it for years. It may go down or up in value from time to time but it the long run it will do fine. Most suitable product for you, e.g. pension, ETF or fund will depend on the details of your financial circumstances. You say you've maxed out your pension - has Mrs Tom Tom? If so, and if you're a higher rate taxpayer then maybe something that's subject to CGT would be suitable. You'd need professional advice on the specific product most suitable.

 

[tom_tom]

Thanks for that ..cheers! ..Mrs Tom Tom has indeed Max Out pension ...ok so if I wanted to do the van guard ..what is the best platform to access? .....yes CGT all day long ..the fecking income tax bill in my house could run 2 or 3 families..if Mrs tom tom gets another promo I think I'll be moving to Monaco lol ...and if I wanted on some.sort of hedge ...what would you recommend?..so 80k in van guard and 20K in something -ve correlatied ?.....I have plenty of raw equity exposure in my pension / employer RSUs..so outside of that I know from 2008 the lows (losses) emotionally outweigh the highs(gains) ..so a comfort blanket would he nice

As you're in a strong financial position, invest in a simple low-cost global index-tracking equity fund e.g. a Vanguard global fund or ETF and forget about it for years. It may go down or up in value from time to time but it the long run it will do fine. Most suitable product for you, e.g. pension, ETF or fund will depend on the details of your financial circumstances. You say you've maxed out your pension - has Mrs Tom Tom? If so, and if you're a higher rate taxpayer then maybe something that's subject to CGT would be suitable. You'd need professional advice on the specific product most suitable.

 

[GSheehy]

...I am risk adverse with Mortgage paid, pension max'd out and close to maxing out An post too.

so for risk adverse ..what's the alternative to leaving in the bank?
( I accept doing nothing is a risk too)

If 10 years isn't too long an investment period for you, could consider SuperCapp Fund

"Once the policy has been in force for at least ten years, the value of the policy is guaranteed to be at least as great as the initial premium paid less charges and any partial encashments or regular incomes taken."

So, the lower the AMC the better.

 

[Marc]

The best investment you could make is in educating yourself to the dangers of excessive conservatism with your wealth.

Your biggest risks to your wealth overtime are capital taxes, inflation and your own longevity not short term swings in capital markets.

[broken link removed]

 

[EmmDee]

I know that the original poster has most definitely got the consensus opinion by now and I'm adding nothing of great value, but I'm actually stunned at how bad this product is. Structured products like this are generally rubbish to benefit the seller rather than the buyer, but the clause that @gravitygirl has quoted above just takes the biscuit.

• If the value of gold goes down, you take the hit, with a maximum loss of 10%.
• If the value of gold goes up, you get a return ... BUT
• If the value goes up by more than 49% you lose 10% of what you invested.

So you can only get a return if the price of gold goes up in a strict range in five years' time! How the fup is anyone supposed to try to predict the price of gold, a notoriously volatile commodity, in five years' time? You'd seriously get better odds gambling.

I actually read the brochure and came to the part about "back-testing". I generally dislike back-testing, as it's possible to analyse historic returns and from that, design a product that would have done well in the past. But this product would have done badly in a majority of scenarios in the past too!

Number of times investors received back between Capital Protected amount of 90% and 100% of Initial Investment: 946 (72.55% of all 5 year periods tested)

I really am stunned at how bad this product is.

It's essentially an option product - a collar (a mixture of calls and puts).

You'd probably be better off taking 10% of the amount you were thinking of investing in this and buying equivalent options