Cautious Savers should not revert to the “Biscuit Tin” mentality

Bank of Ireland Life has today (21st April 2009) announced the launch of two new capital protected investment products. Secure Advantage 2 and Secure Plus 2 will provide cautious savers with two new opportunities to make more of their money in the safe environment that capital security can provide.

In the current climate of low interest rates and market uncertainty, many consumers might be tempted to simply stash their cash at home – but this “Biscuit Tin” mentality is dangerous. For instance, the latest statistics from the Central Bank show that since the introduction of the euro over seven years ago, a staggering €244 million in Irish Punts has yet to be cashed. During this time the purchasing power of this money has fallen by about 22%*.

This significant sum highlights the creeping loss “biscuit tin” savings brings to the value of nest eggs even in times of low inflation. These losses don’t get the attention that stock market losses do. Yet they destroy the value of savings more predictably and consistently than market falls ever have.

People with a lump sum who are looking for security need to bear this in mind. With Secure Advantage 2 and Secure Plus 2, Bank of Ireland Life offers two products that protect capital but additionally offer the potential for strong growth.

  • 1) Secure Advantage 2:
    Secure Advantage 2 offers investors the potential for growth with the 100% security of their original investment over the five-year, eleven-month term of the investment bond. The unique bond works by actively managing market volatility daily, reducing an investor’s exposure to equities if markets are suffering short and sharp movements, and increasing exposure when markets are more stable.
  • 2) Secure Plus 2:
    Bank of Ireland Life’s highly successful Secure Plus – Investment Bond, which has received investment sales of over €110 million to date, also provides investors with good growth potential and the comfort of 100% capital security at the end of the term.

The sixth series of the Secure Plus should appeal to medium and longer-term investors, with a 4-year 3-month term of investment, offering investors the potential to grow their investment by a maximum of 33% before life assurance tax.

Commenting on the launches, Brian Grimes, Head of Investments, Bank of Ireland Life said;

“We have learned that doing nothing with the money we have ear-marked for the long-term is not an option as its value will diminish over time. We need to go for growth with this money, and while not a prediction for the future, equities have historically provided this growth given the time to do so.”

“With stockmarket prices at historic lows, now is a good time to make an investment. However, it is understandable that people are reluctant to do so given recent history. There are two cardinal rules of investing – quality asset diversification and time. Both underpin the design of the Secure Advantage and Secure Plus bonds. This, accompanied with the capital security of the products provides investors with real opportunities to take advantage of the historic low prices.”

*Source: Bank of Ireland Global Markets, April 2009

ENDS

Notes to Editors:

Key Features of Secure Advantage 2:

  • The Governor and Company of the Bank of Ireland provides Bank of Ireland Life with the 100% Capital Security and it is assumed that they will be able to meet their commitment to Bank of Ireland Life that investors will receive at the maturity date, at a minimum, the amount originally invested. This 100% Capital Security applies only on the maturity date.
  • Diversified equity investment – an equity investment that tracks five leading global indices (Eurostoxx 50, S&P 500, FTSE 100, Nikkei 225, and MSCI Emerging Markets)
  • Dynamic investment strategy:
  • In times of high volatility – exposure to equities will fall
  • In times of low volatility – exposure to equities will rise
  • Term: 5 years 11 months
  • Minimum Investment: €5,000
  • An option exists to fully encash on 3rd anniversary. It will be the market value of your policy that will determine the amount paid back (or 90% of the original investment if this is greater).
  • The fund will close to investment on 29th May 2009.
  • Protected Return – returns are based on the closing values of the above indices over the final 12 months of the investment term. This protects investors from any last minute falls in markets as investors approach the maturity date. However, reducing risk in this way may adversely impact performance should markets rise just before maturity.

Key Features of Secure Plus 2:

  • The Governor and Company of the Bank of Ireland provides Bank of Ireland Life with the 100% Capital Security and it is assumed that they will be able to meet their commitment to Bank of Ireland Life and that investors will receive at the maturity date, at a minimum, the amount originally invested. This 100% Capital Security applies only on the maturity date.
  • Highly Diversified – 3 distinct asset classes which span across 3 continents, offering an attractive diversified investment portfolio:
  • 40% – Equities: 37.5% S&P 500, 37.5% DJ Eurostoxx 50, 25% Nikkei 225
  • 25% – Bonds: iBoxx Euro Index Eurozone Bonds
  • 35% – Commodities: Tracks the performance of the Dow Jones AIG Commodity Index
  • Term: 4 years 3 months
  • Minimum Investment: €5,000
  • Investors will benefit from 60% of any growth, subject to a maximum potential return of 33%. Subject to life assurance tax. This means the maximum annual return an investor could receive before tax is 6.5% p.a. It is important to note that this is not a promised return and that the actual return (if any) that an investor will receive is dependent on investment growth.
  • The fund will close to investment on 29th May 2009.
  • No partial or full encashments allowed during the policy term
  • Protected Return – the return is averaged over the first 6 months and the last 6 months to help shield from any sudden drops in value at the start and the end of your fund term. However it should be noted that if the value of the basket of indices increases during this period then the return will be reduced.

For further information contact:

Laura Erskine
Public Relations Manager
Bank of Ireland Life
Tel: 01 617 2586
Mob: 086 856 2929

Sharon McDonnell
Group Consumer Communications Manager
Bank of Ireland
Tel: 01 604 3750
Mob: 087 226 9324

Warning: If you cash in your SecureAdvantage 2 investment before 8th May 2015 you may lose some or all of the money you put in.

Warning: For Secure Plus you cannot choose to cash in your investment before 4th September 2013.

Warning: The value of investments may go down as well as up.

Warning: This product may be affected by changes in currency exchange rates.

Terms and conditions apply. Where relevant, life assurance tax applies. While great care has been taken in its preparation, this document is of a general nature and should not be relied on in relation to a specific issue without taking appropriate financial, insurance, investment or other professional advice. The information has been taken from sources we believe to be reliable, however we do not guarantee their accuracy or completeness and any such information may be incomplete or condensed. All opinions and estimates constitute best judgement at the time of publication and are subject to change without notice. The content of this document is for information purposes only and does not constitute an offer or recommendation to buy or sell any investment or to subscribe to any investment management or advisory service. If there is any conflict between this document and the Policy Conditions, the Policy Conditions will apply. Please note that mention of specific stocks/shares or investments is not a recommendation to trade in those stocks/shares or investments.

New Ireland Assurance Company plc trading as Bank of Ireland Life is regulated by the Financial Regulator and is a member of the Bank of Ireland Group.