Royal Bank of Scotland has introduced a third issue of the guaranteed income and growth account (GIGA), which combines a high-interest account and a guaranteed equity bond.
Investors with a lump sum of at least £5,000 must divide their investment equally between the two elements. The high interest account produces monthly income of 6 per cent over the three-year term, which is slightly higher than offered by the first issue in November 2001. This offered 5.84 per cent and also offered a lower level of growth on the guaranteed equity bond element.
This bond offers 50 per cent of any growth in the FTSE 100 index during the three-year term, whereas the first issue was capped at 40 per cent. The original capital is fully guaranteed, so there is no risk to capital even if the FTSE 100 index falls over the term.
It is likely to appeal to cautious investors who want a combination of income and growth. Some investors may decide to take out a guaranteed equity bond which offers higher growth potential and a separate high interest account. But they may not be able to get a high interest account that provides as much income as GIGA.
For example, Britannia Building Society has a three-year fixed-rate bond that offers a monthly income option, but this is lower than GIGA at 4.75 per cent.