Guide to Essential Money Tools

Savings Tools

Money tool - capital protected accounts

Bank of Scotland International

Savers who are looking for a return on their investment which has the potential of being higher that normal deposit rate, but who are not yet ready to leap headlong into the higher risk world of international equity or offshore fund dealing, are opting in increasing numbers for a new breed of product called capital protected accounts.

As the name suggests, these accounts offer one of the most important features of a deposit account, namely 100% protection of the capital deposited. Where they differ is that the return offered is not driven by UK base rates, but rather by movements in a single stock market or range of stock indices that the account will track. They are generally available over three or more years.

Typically, such accounts offer a return expressed as a proportion of the rise in a given index. So if the UK FTSE market is being tracked and it has risen by 50% over the term of the account, the account holder will receive a given proportion of this rise, which will have been clearly stated in advance.

Bank of Scotland International is one of the biggest names in this dynamic new market, with a constantly changing range of new products.

Bank of Scotland International Capital Protected accounts are usually available in sterling and US dollars, giving global
investors an opportunity to diversify a portfolio.

Some of their accounts will even offer more than 100% capital protection, in which case the accountholder can be sure of a minimum return in all cases.
The return on capital protected accounts is not expected to fall within the scope of the European Savings tax directive, so all returns are paid in full to the investor.

This can be a valuable feature for those planning how best to use tax allowances or those living in a low or zero tax environment.  However individual need to check their own tax situation as there maybe a potential liability.