Investing for security
Investments designed to repay your initial capital and strategies of diversification designed to spread risk.
Is investing for security for me?
If you want an investment that aims to repay your capital at maturity, even if the underlying asset to which it is linked drops in value or you want strategies aimed at reducing the risks albeit that they might produce lower returns, then investing for security could be right for you.
But you need to be aware that as with all other investments, you could still receive back less than you originally invest or nothing at all.
What are my investment options?
Structured Products - Investments that aim to at least repay your capital
Is this type of investment for me?
If you want an investment that aims to repay your capital at maturity, which could be five or six years on, even if the underlying asset to which it is linked drops in value, then investing in certain types of these products could be right for you.
Structured products offer fixed-term investments (usually five or six years) with potential returns paid out at the end of this period. They aim to produce higher returns than savings accounts while still repaying your original capital at their maturity. With some products your capital is repaid at maturity without any conditions being met. With others, there may be a minimum investment performance required for full repayment.
Nevertheless you need to be aware that, despite the aim of capital repayment, as with all investments, you could receive back less than you originally invest or nothing at all. Furthermore, if you need to sell before the maturity date you might make a loss.
Also, these investments are issued by financial institutions and if they were to become insolvent, you may not get the money due to you. Unlike money deposited in savings accounts, no compensation scheme would apply in this case. Though these institutions are subject to the strong financial UK regulatory system, this does not remove the risk entirely.
Funds - Diversification to spread your risk
These offer a diversified portfolio, thus spreading your risk. You can sell your investment at any time but these work best as a long term investments – for a minimum of five years.
All investments come with varying levels of risk, depending on the type of investment you choose.
- Funds – you may receive back less than your original investment.
- Structured products – aim to repay your capital at maturity but in some cases this will be conditional on a minimum investment performance from the underlying asset to which they are linked. The issuer of the investment could default on their financial obligations to you and you would therefore not receive back your original investment.
There is also a risk to the potential returns you could receive – if the markets perform badly you could get little or no return.
If you are not prepared to accept these risks, you should consider keeping your money in a bank account.
Remember that all investments carry risk. Investments can fall in value and you could get back less than you invested.
Investments in currencies other than your own may rise or fall because of changes in exchange rates.
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Our investment service is available to you if you have £100,000 (or currency equivalent) to deposit and maintain across your International Banking accounts and investments.