Different Types of Bonds
Guaranteed Equity Bonds
A Guaranteed Equity Bond is an indirect, low-risk
method of investing in the stock market. GEBs assure the return
of your initial capital but do not offer the same potential level
of profit of a direct investment.
GEBs have terms of 5 to 6 years
and use different global stock market indices, depending on
your provider, to track the growth
of your investment. Either one particular index or an average
of multiple indices from the global stock market is used.
These
indices
include:
- Dow Jones EUROSTOXX 50sm (Europe)
- FTSE 100 Index
(UK)
- Nikkei (Japan)
- S&P 500 (USA)
GEBs vary widely. Overall growth
is often capped, either on an annual basis or on the final
return. National Savings
and Investments
offer a GEB that offers a return equal to 95% of
the overall growth of the FTSE over a period of five years, otherwise
your original
investment is returned.
