Structured products are designed by product providers (such as life insurance companies, banks and building societies). They may provide an element of guarantee for your money and have a fixed term.

Of course, as these products are individually designed by their providers, it’s difficult to give you concrete guidance about what you should and shouldn’t expect. That being said, any product provider offering one should be very clear whether there are any minimum or maximum returns you can expect, as well as making you aware of any guarantees and conditions. An example of a structured product is one that is linked to an index, e.g. the FTSE 100, and will involve depositing your money with a provider for an agreed period of time – for example five years. During that time, they will invest it on your behalf with the aim of providing potential growth (or an income) that is linked to rises in the index. If the index to which the product is linked falls over the period of investment there will be a mony-back guarantee on the amount you invested (your capital).

Pros

• Structured products can, depending what they are linked to the performance of, offer you the potential for high returns.
• Many provide some level of guaranteed return.
• As there are often a large number of variations available at any time, you are more likely to find a fit for your investment goals and needs.

Cons

• Your money will be tied-up - it’s not a short-term investment option. If you do decide you need your money out early, you may well lose the guaranteed element and face high charges.
• Your money is likely to be linked to the performance of higher risk assets such as stocks and shares.
• Providers usually sell these as a fixed offer, either limiting the total amount of money that can be invested or the time you have to invest – so if you’re interested you have to get in early.
• You won't get the benefits of dividend payouts.
• Some products may not guarantee your initial investment, meaning you could get back less than you put in.

• Even if your initial investment is guaranteed, some products may not guarantee any growth

If you’re looking for the features that structured products offer an investor and you’re prepared to leave your money for as long as the product requires, it’s worth doing some research about which structured products might fit with your needs. And remember because they are unique to the provider, each will have their own features and will be different to other products.

You can buy structured products through life insurance companies, some banks and building societies and National Savings and Investments – all of these will give you the reassurance of being backed by large, well-known, reputable companies.

As they are unique to the provider, you really have to get advice to make sure the product suits your goals, level of investment, attitude to risk and timescales.

Get in early – often these products are a limited offer – so make sure you get in early so you don’t miss out.

Be informed – make sure you understand the terms and conditions before you invest.

Get advice – if you’re not sure this product is for you make sure you get advice.