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L&G bond taps into growing market for cautious investing

Legal & General has launched an RPI-linked savings bond as it seeks to capitalise on investor caution over persistently high inflation rates.

The five-year fixed-term structured deposit bond guarantees a minimum return of 17.5 per cent at maturity or 100 per cent of RPI growth, whichever is higher.
Minimum investment is £500. Commission is 2.5 per cent of the sum invested.

Head of business development James Harrington says: “If the RPI stays at its current level or goes higher, savers are facing an inflation risk to their capital. This bond will be attractive to cautious investors who are concerned that high levels of inflation may, if not checked, have a significant impact on the real value of their savings over time.”

L&G says the plan is available for investment until January 6, 2012. The end of the five-year fixed term is January 25, 2017.

Radcliffe & Newlands chartered financial planner Mel Kenny says: “Products designed specifically to protect against inflation are becoming all the rage.

“This is an interesting product that could suit a lower-risk investor who is simply looking for reliability in maintaining purchasing power. It would also be a useful diversifier in a bigger portfolio.”

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