GE Life has created the sixth issue of its high income and growth plan with the over-50's in mind.
This Dublin-based closed-ended investment company is linked to the performance of the Eurostoxx 50 index, which consists of 50 European blue-chip companies outside the UK, such as Nokia and is available as an individual savings account (Isa) and a Pep transfer.
Investors can take income at 10.25 per cent a year or 0.8 per cent a month. Alternatively, they can go for a growth option that offers a return of 33 per cent after the term of three years and two months.
Investors' capital is not guaranteed, but there is a risk of capital erosion if the Eurostoxx 50 index falls by more than 20 per cent or more by the end of the term. Where the index falls and then recovers to at least its starting level by the end of the term, investors will still get their original capital returned in full.
A fall between 21 and 30 per cent erodes capital at the rate of 1 per cent for each 1 per cent fall in the index. A fall of more than 30 per cent reduces capital by 2 per cent for each 1 per cent fall in the index for the income options and by 2.66 per cent for each 1 per cent fall if the growth option is chosen.
This product is likely to appeal to sophisticated investors as the way the final return is calculated is complicated, and there is a danger that some investors could be seduced by the headline interest rates without being fully aware of the risk of capital erosion. On a positive note, European stockmarkets are at a low point, giving investors the chance to take advantage of any subsequent highs that may be around the corner.
The Eurostoxx 50 index rose from 3326.35 points on June 17, 1998 to 3633.43 points on August 17, 2001.