Barclays Bank has introduced another issue of its guaranteed equity savings bond, which divides investors' capital equally between a guaranteed equity bond and a high interest account.
The high interest account element is a one year fixed-rate bond that pays interest of 8 per cent. It allows investors to make emergency withdrawals of at least £1,000, but this is subject to the loss of 60 days' interest.
The guaranteed equity bond element is linked to the FTSE 100 index during a three-year term. To calculate the returns, the closing level of the FTSE 100 index is taken on July 1, 2002 and compared with an average taken during the last 12 months of the term. If there has been any growth, investors get 50 per cent of this growth and their original capital is returned. Where the index has fallen, investors will only get their original capital back.
Unlike the previous issue of the bond, which had a minimum investment level of £10,000, this bond is open to investors with at least £5,000. This lowering of the entrance level was designed to make the product accessible to people with less to invest.
The guaranteed equity bond element of this product is identical to that of the Royal Bank of Scotland's guaranteed income and growth account, which also offers 50 per cent growth in the FTSE 100 index during a three-year period, with the capital returned whatever happens. However, investors cannot make any withdrawals under the high interest account element, which Barclays allows. This makes it unsuitable for those who may need emergency access to their money.