The guaranteed equity bond (GEB) is expected to attract would-be investors who are concerned about investing in stocks and shares following recent stock market volatility.
Under the terms of the five-year bond, it guarantees to return the original investment, plus 10% or up to an increased 70% of any growth, whichever is greater, in the value of the FTSE 100, Nikkei 225 and DJEuroSTOXX 50 indicies. As returns are paid net of tax, 70% growth is equivalent to 87% before tax for basic and higher rate tax payers.
In addition, Nationwide has increased its bonus for early GEB investors. Customers who invest between August 13, 2007 and September 29, 2007, will receive up to a 0.85% bonus increase.
Prior to these enhancements, the GEB offered up to 65% of any growth in the indicies, and a bonus of up to 0.80% for early investors. This GEB was closed to new business as of August 11, 2007.
Robin Bailey, Nationwide’s investments director, said: Despite recent volatility, the stock market has been a good place to be over the last five years. People who are wary about investing will find that guaranteed equity bonds give them the best of both worlds – the benefit of potential stock market growth without putting their capital at risk.
