Third sixth year growth deposit bond is launched

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Written by Ray Clancy

Tuesday, 24 August 2010 09:24

Legal & General has launched its third sixth year growth deposit bond to offer investors the potential for capital growth linked to the performance of the FTSE 100.

The new product, 6 Year Growth Deposit Bond 3, is available to IFAs for a limited eight week period from Monday 23 August to Friday 15 October 2010 and also offers the security of knowing their original capital is protected at the end of the fixed term.

It is a six year fixed term deposit plan that offers investors 200% of any capital growth in the FTSE 100 Index, up to a maximum of 45.5% of their original investment, plus the return of that original investment at the maturity date, which is 4 November 2016.

‘The launch of our third deposit bond this year confirms our commitment to offer customers the opportunity to invest in products with returns reflecting the performance of the FTSE 100 Index, whilst minimising risk,’ said Legal & General’s head of business development, James Harrington.

‘It should prove extremely attractive for many customers who are seeking a potential return that exceeds the rates they could achieve by leaving their money in a traditional deposit account. I believe this launch is particularly timely as the prospect of a long period of relatively high inflation in the UK, which has been raised by many commentators over recent weeks, is likely to prompt savers to search for inflation beating investments. Plus, they could also benefit by investing in a cash ISA tax free,’ he explained.

The minimum investment is £500 and the bond is available as a deposit plan for individuals, pension trustees, charities and corporate applications and for cash ISA transfers for which there is no maximum. It is also available as a cash ISA for the 2010/2011 tax year for which the maximum investment is £5,100. The closing date for ISA applications is 1 October to allow time for completion of transfer before the offer close date.

The company added that commission is 3% of the sum invested. No commission is payable on switches from other Legal & General investments. Full details of the 6 Year Growth Deposit Bond 3 are available on the Legal & General dedicated adviser websites.

This plan is not suitable for customers who may need to access their money before the six year maturity or who may be seeking a definite return.

Taxation, as this is a deposit investment any growth received is treated as interest. The cash ISA, and an ISA transfer, is a tax free investment. Any growth received through the deposit plan will be paid net of UK income tax at the basic rate (currently 20%). Non tax payers can reclaim this tax. Higher rate tax payers will have further tax to pay. SIPP, SSAS, charity or company applicants can be paid without the deduction of income tax but only where sufficient documentary evidence is provided.