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Northern Rock walks the tightrope

Northern Rock and Legal & General have linked up for the second time to create the second edition of balance-choices.

Balance-choices combines an instant access savings account from Northern Rock with Legal & General&#39s with-profits income bond.

Investors must place at least half of their investment, but no more than 80 per cent, in the Legal & General with-profits bond. The rest goes into the savings account element, which pays interest at 8 per cent gross a year until July 1, 2002. This is higher than the previous issue of the product, which was fixed at 7.05 per cent gross. Investors have unlimited penalty free access to this part of their investment, even during the fixed rate period.

The with-profits element of the product is made up of shares, fixed interest securities and commercial property. The return is provided through an annual bonus rate, which is currently 6.25 per cent, but this could vary in subsequent years depending on how the underlying investments perform and on Legal & General&#39s view of future performance.

Products that are split between a savings account and a bond are becoming popular and this may be because they are in tune with the cautious mood currently felt by many investors. Those who are unsatisfied with low interest rates offered by savings accounts but who are reluctant to make stockmarket investments, may be looking for a compromise such as balance-choices.

However, some investors may also give with-profits bonds a wide berth after bad publicity following the slashing of annual bonus rates by some companies.


Advisers prefer to use drawdown specialists

Leading IFAs oppose income drawdown becoming a permitted activity as they favour referring clients to drawdown specialists. Sofa conference delegates were asked whether they bel-ieved advisers discussing inc-ome drawdown should take the K10 exam. But while some IFAs saw the move as inevitable, others argued that drawdown cannot be considered in isolation from more general […]

Newcastle builds balanced equity bond

Newcastle Building Society has introduced the second issue of its balanced equity bond. This bond marries the fifth series of Newcastle Building Society&#39s global guaranteed equity bond with a fixed rate savings account. Investors must place half their investment into each element. Interest on the savings account element is fixed at 7.5 per cent gross […]

Principality mortgage has more than meets the eye

Cardiff-based Principality Mortgages’ new three-year fixed rate mortgage is available to all borrowers.The mortgage, which is fully portable, has a fixed rate of 5.89 per cent until November 30, 2004. The maximum loan to value for first-time buyers is 95 per cent, with remortgages restricted to a maximum valuation of 90 per cent.Principality will refund […]

Government needs to trust advisers in a partnership

To Ron SandlerI have just read the open letter to you from a group of IFAs and felt it would be appropriate to express an opinion that I have yet to see expressed elsewhere. They say you are questioning whether there are alternative methods of remuneration for IFAs and comment on the suggested cap on […]

Testing the Foundation

The global economy isn’t headed into recession, at least not yet. This month, David Lafferty, Chief Market Strategist at Natixis Global Asset Management, examines current capital market and portfolio risks for signs of recession. Click Here for Capital Market Notes


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