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Saturday 20th of June 2009
June 17, 2009

Nationwide guarantees returns on combination savings


by David Masters
”Nationwide

Nationwide this week launched a new savings account for customers looking for both short-term and long-term returns.

The Guaranteed Combination Plan combines a one-year 4% fixed-rate bond with a six-year equity bond linked to the stock market.

The equity bond, provided by Legal & General, tracks the FTSE 100 Index, the DJ EuroSTOXX 50 Index, and the S&P 500 Index, with a guarantee to return the customer’s capital if the indexes fall during the six year period.

Maximum returns on the bond are capped at 50% of the customer’s initial investment, equivalent to 6.99% AER.

The minimum investment for both the fixed-rate and the equity bond is £3,000, and they must be opened at the same time.

Robin Bailey, of Nationwide, said: “We understand how important it is for savers to find a competitive return for their savings in this low interest rate environment, which is why we’re delighted that this exclusive option is now available.”

However, ‘This is Money’ columnist Alan O’Sullivan warned investors to “avoid, avoid, avoid” Nationwide’s offer because it has too many “strings attached”.

“You don’t have to pay money to access this, but you do have to invest at least £3,000 for six years and a large proportion of your profits could find its way into the providers’ own coffers, because the return is limited to 50% of your initial investment,” O’Sullivan said.

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