Tesco bond doesn't offer supermarket savings

 

Simon Read
Friday 11 May 2012 18:29 BST
Comments
Tesco's corporate bond is offering 5 per cent a year until 2020, with a minimum investment of £2,000
Tesco's corporate bond is offering 5 per cent a year until 2020, with a minimum investment of £2,000 (John Lawrence)

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

Tesco Bank is offering a tempting, 5 per cent a year until 2020 in its latest offering.

But don't be fooled into thinking you're getting a safe savings account.

The deal is instead offered through a corporate bond, an investment which brings its own risks, according to Brian Dennehy of FundExpert.co.uk.

"For starters, corporate bonds are not covered by the statutory safety net, the Financial Services Compensation Scheme," he pointed out.

If the company issuing the bond goes bust, corporate bond investors will lose out.

Mr Dennehy says anyone tempted by the Tesco deal should consider corporate bond funds.

"By investing in a wide variety of bonds, the risk of losing cash is reduced," he said.

Returns, although not guaranteed, can also be attractive. L&G High Income offers a yield of 6.6 per cent, for instance.

However, if you really want to invest in the Tesco corporate bond you must subscribe by 21 May with a minimum £2,000. You can do so through most stockbrokers.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in