Spotlight: Zurich guaranteed account

Zurich is launching a new guaranteed account next week that promises to pay investors a return of 42 per cent over five-and-a-half years, as long as the FTSE 100 index is up during that period. If it isn't, investors get all their capital back.

In the current climate, this seems attractive. After all, the FTSE 100 is back at five-year lows, so there's a high chance it will be up on these levels by 2014. But it actually represents pretty bad value. Even if investors are paid out the full amount, it's equivalent to an annualised return of just under 6.6 per cent. This compares poorly with the 7 per cent Anglo-Irish bank is currently offering on its two-year fixed rate bond, which comes free of risk.

Although unlikely, it's not impossible that the FTSE 100 will be below current levels in five years, and with inflation at 10-year highs, getting no return over five years means a hefty loss in real terms. Savers should give plans like this a wide berth.