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Wealth and safety

Keydata has produced a highly attractive plan called the 100 per cent capital protected growth plan. It pays 109.5 per cent of the return on the FTSE 100 index with no upper growth limit over a period of six years, with 100 per cent capital protection.

Growth is taxed as capital gains and it is possible to invest directly or through Isas or pension plans such as self-invested personal pensions or small self-administered schemes.

All the investor’s money is allocated to the plan immediately and there are no initial fees.

How is this possible? The answer is that the extra growth of 9.5 per cent and the management fees come out of the dividend yields.

With this extra amount and 100 per cent capital protection, I believe that this plan is excellent value for the conservative investor who cannot afford to lose capital.

This is important as in any of the six-year periods starting from July 2, 1997, 1998, 1999 and 2000, capital protection would have been required and only the £10,000 would have been returned.

A direct investment in the FTSE from July 2, 1998 to July 2, 2004 through the best tracker fund would have returned less than £7,400 – a loss of £2,600.

However, over most six-year periods, the FTSE 100 has risen. For example, from July 2, 1994 to July 2, 2000, an investment in this plan of £10,000 would have returned £22,590.41 to investors. From July 2, 2002 to July 2, 2008, the return on the same £10,000 investment would have been £12,118.09.

From the present low level of the index, it is far more likely that investors will receive a much higher return on a £10,000 investment but there is still a chance that the stockmarket could fall over the six-year period. The plan closes on August 29 and the minimum investment is £3,600.


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