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Web Express Guide Costa Del Sol Edition No. 48 June 2004
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No. 48
June 2004
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When is a bank account, not a bank account?

When it's a Stock Market Linked Term Account or SLTA, so what's the difference; it is a bank account, but the interest rate is linked to the performance of a designated stock market index.

The SLTA offers a tailored solution to meet client requirements. The key areas of choice are:
 
Investment Term: - 3, 4 or 5 years
Market Link: - FTSE100, DJ Euro Stoxx 50, S&P500, Nikkei 225 (in Addition other markets can be requested, although minimum investment Amount may increase).
100% capital security it's a Bank Account. Redemption facility has just been introduced.
No explicit charges - charges are factored into the participation rate or gearing level provided to clients.

So how does it work?
Mr X has GBP250k to invest and after due consideration decides to place his money into SLTA. The term is 4 years, linked to the performance of the FTSE100 with a participation rate of 67%. At the end of 4 years the performance in the FTSE100 has been great and increased by 73% (after final 12 months weekly averaging). Therefore the clients "interest" earned over the four-year period is:
 
250,000 x (73%* 67% = 48.91%) = 122,275 + original capital = £372,275
 
So what are the key benefits?
• The comfort of knowing your deposit is with a major banking corporation.
• An interest rate, linked to your choice of one the following Stock market indices-you benefit from any growth in the index during the deposit term;
 
Stock markets; UK - FTSE 100 Index, US - S&P 500 Index, Japan - Nikkei 225 Index, Europe - Dow Jones EURO STOXX 50 Index
 
• Even if your chosen stock market falls, you will still receive your original deposit back in full.

• As a further option, you can choose to receive a minimum return, over and above the amount of deposit, so that regardless of performance of the index, a minimum return is assured. Note: If you choose this option it will reduce the level of growth you may receive.

• All your returns are paid without the deduction of tax at the end of the deposit term.


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Key Benefits: 
Example 1 Example 2 Example 3
Amount of deposit £1,000,000 US$1,000,000 Euro 1,000,000
 
Term of deposit 5 years 5 years 5 years
 
Stock market link UK - FTSE 100 USA - S&P 500 Europe - Dow Jones EURO STOXX 50
Participation Rate* 77% 44% 54%
 
* The participation rate will change with the market conditions.
And, for readers of the Web Express Guide a 'reduced' minimum investment of £/US$/E 100,000, if your happy to deposit your money for a fixed 5yr term and wish your deposit to be;
• Sterling linked to the FTSE 100
• US Dollars linked to the S&P 500
• Euro linked to the Dow Jones EURO STOXX 50
And do not require a Minimum Return over and above the amount of deposit.
 
Comments:
For UK residents, your interest will be subject to income tax. However, if you are not domiciled in the UK, a UK tax liability will only arise if you remit your returns into the UK.
If you are not resident in the UK for UK tax purposes, you will be not liable to UK income tax, but you should check the rules in your country of residence.
 
Best Advice:
If in any doubt, seek professional financial and tax advice and always read any small print carefully to make sure you understand any investment properly.
 
Our financial feature continues with further information from Belgravia InterVest Group. If you have any queries on any fiscal matter please email to moneylink@webexpressguide.com or if you wish call Mark Bullen on
626 787 160. All your questions will be answered and may be published if thought to be of interest to other readers.
Of course, all identities are kept strictly confidential.




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