Guaranteed Equity Bonds - What Is A Guaranteed Equity Bond & How Does It Work?

A guaranteed equity bond is a way to have some benefit from the stock market without having the risk of losing money. The way a guaranteed equity bond works is you put your money in on a particular day and you then have the money locked in for a fixed for a fixed period which is usually around 5 years and at the end of the term you get your capital back plus a payment of the amount the FTSE 100 has increased which may be somewhere between 1% and 65%.

So what happens if the FTSE 100 falls? Well in that circumstance you get all your capital back and no extra payment. Also note that if the FTSE grows more than 65% you still only get 65% as the maximum amount of return is capped to this level. All gains received through a guaranteed equity bond is taxable.