Take the guaranteed equity bond. The very name offers it’s the perfect investment: it’s a bond, so you think it is safe; it’s guaranteed, so it’s extra safe; but it’s also got equities in it so it’s a little bit racy too. All in all, it appears to offer upside with no downside.

But strip the marketing veneer from most GEBs and they don’t look quite so good.

There’s the current advancing  from Birmingham Midshires, for instance. It offers a return of 19% over three years as long as the FTSE 100 index doesn’t fall over that period. If the Footsie does decrease you get a return of nothing but you do get your original capital back in full. This sounds like a reasonable sort of a deal but in fact it is truly pathetic.

 19% return over three years works out at a measly 5.97% a year. But if you put your money in an ordinary savings account today you can get interest of 5.1% a year, more in longer-notice accounts.

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