LOOSE CHANGE

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The Independent Online
The mysterious case of the Morgan Grenfell European funds is a timely reminder that investments based on stock markets can never be entirely risk-free. At worst, it could set the cause of unit trusts back two years. It also comes at a convenient time for deposit accounts and a number of new "guaranteed" investments now being launched.

Scottish Life is offering a deposit bonus bond which offers investors money back and a guaranteed minimum return of 34.5 per cent after six years, equal to 5.06 per cent compound, even if the UK and US stock markets fall.

If they rise, the bond could earn bonuses of up to 17.25 per cent a year, payable for any year when both the FT-SE 100 and S&P 500 rise.

The bond is invested in a long-term deposit at Midland Bank, the bonus is created by trading in derivatives, managed in the Isle of Man to defer tax liability until the bond matures.

The gain is liable to UK income tax when it is cashed but there is an option to extend the policy beyond six years, or to assign it to a child under 18 who could cash the proceeds tax-free and finance a college education if they had no other source of income.

The ability to defer the tax could also be useful for pension and inheritance tax planning, and for trustees. Minimum investment is pounds 5,000 and the bond is available through IFAs.

London-based Johnson Fry is launching Double-7 CHIP, a corporate bond Pep with a guaranteed return of 7 per cent a year tax-free for six years and full return of capital on maturity. Alternatively, investors can opt for a 50 per cent capital gain.

Up to pounds 12,000 can be invested with half earning 7 per cent gross until next April when it will be Pepped free of charge. The minimum investment is pounds 3,000.

TSB is launching a new tranche of its Guaranteed Stock Market Bond. There is an initial charge of 5 per cent but investors get this, and all money invested, back even if the stock market falls between now and maturity in October 2001.

If the index rises, investors will get 95 per cent of their initial investment plus all the appreciation in the index between the start and the average in the final year.

Any gains of 25 per cent can be locked in, and all gains are free of basic rate tax, but there will be no dividends or income and there is no early withdrawal option. The minimum investment is pounds 2,000. Call 0500 758444 or ask at a branch.

Marks & Spencer has launched a second issue of its Guaranteed Capital Investment Plan. Cash is invested in the M&S 100 companies unit trust via a tax-free Pep and it guarantees return of capital in full after five years or prior death. Gains are paid in full.

Minimum investment is pounds 3,000, there is no initial charge, but the management charge is 1 per cent a year plus an annual "guarantee" fee of 1.5 per cent plus VAT. Details available in-store next week.

Birmingham Midshires is launching three equity-linked savings accounts (Elsas). One offers to match gains in the FT-SE 100 in full and return 110 per cent of the investment even if the stock market falls, a second offers 50 per cent gross after five years provided the index does not fall, and the third allows up to half the investment to earn 8 per cent gross in the first year. Minimum investment is pounds 2,500. Call 0500 070707

Until 27 September Chartwell Investment Management in Bath is offering to place investor cash into with-profit bonds with a choice of a dozen different insurance companies and rebate the 5 per cent commission to the investor. Call 01225 446556 for details.

Bristol & West is offering an escalator Tessa paying 6.5 per cent in the first year rising by 0.25 per cent to 7 per cent in year three, then 7.5 per cent and 8 per cent. Minimum investment is pounds 9,000.

Cheltenham & Gloucester has withdrawn its range of discount mortgage offers, and further reduced its cash-backs, reflecting the recovery in genuine demand and a wish to reward established borrowers, according to chief executive Andrew Longhurst.

In future, only those moving home can qualify for the maximum 3 per cent cash-backs, remortgages will get a maximum of 2 per cent, but the standard variable rate will come down from 6.9 per cent to 6.85 per cent.

PETplan is introducing a budget plan with monthly premiums for cross- bred dogs. It covers up to pounds 1,000 in vet fees for each event. Lower rates are available to owners who pay the first charge themselves.

Travellers will be able to buy and sell back foreign currency and travellers cheques from the 700 travel shops of Going Places free of commission for the next 15 days. The promotion covers the busiest travel time of the year and could cost pounds 1m, although the head of foreign exchange, John Bavister, hopes to sell more holidays to customers looking for a package.

Alliance & Leicester has cut its two-year fixed mortgage rate from 5.10 to 4.99 per cent, cut the fixed rate element on its two-stage Double deal mortgage to 5.4 per cent and extended its existing one-, two-, three- and five-year fixed rate offers.

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