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Julian Gibbs

Eurolife has just introduced its High Income or Growth Plan 3, which is

even more ingenious and lower risk than its previous plan. It pays 0.8 per

cent a month, 10.5 per cent a year or 34 per cent growth over the term of

three years and two months.

The return is tax-free for Isa and Pep transfers. Direct investors, who

may place up to £1m

in the plan, pay only 10 per cent income tax or

32.5 per cent for higher-rate taxpayers.

The only time that investors may lose capital is if 10 or more of the 30

shares to which it is linked fall by more than 30 per cent during the

period and do not recover. The shares are all blue chips,

a few of which have fallen heavily over the past three years and are, in

my opinion, most unlikely to fall by another 30 per cent over the next

three years.

They include Marks & Spencer and Invensys, which have fallen by over 30

per cent in the past three years but are on the way to recovery, as well as

shares like Barclays, British Telecom, Cable & Wireless, Glaxo SmithKline,

HSBC, Legal & General, Prudential, Royal Bank of Scotland, Shell and

Vodafone.

Most of these are considerably off their highs and should show steady

progress over the next few years. Falls of 30 per cent or more are most

unlikely.

Most City institutions are forecasting the FTSE 100 to rise by around 15

per cent in the next 12 months, according to a survey of 12 leading

forecasters carried out by L&G. The highest forecast is 29 per cent by

Schroders and lowest is 8.7 per cent by Merrill Lynch.

It is expected that UK shares will rise further

over the next three years, provided the new UK

Government continues a prudent economic policy. Of course, it is likely

that four or five of the 30 shares may do badly but, as

long as not more than nine fall by 30 per cent, the investor&#39s capital is

returned in full.

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