Interest rate of 7.3% annually now provides a secure investment opportunity.
High-Interest Investments in 2025: Get up to 7.30% interest with relative safety! Find out if HSBC's E.ON equity-linked bond is the right alternative to your savings account.
In the ever-changing financial landscape, finding secure investments can become a daunting task. Though 2024 showed favorable interest rates, the upcoming 2025 year may offer less favorable terms for savings and fixed-term deposits. Yet, don't fret! We present a simple yet relatively safe alternative:
Secure up to 7.30% interest p.a. for two years
HSBC has developed the E.ON equity-linked bond, allowing investors to secure interest of up to 7.30% per year for up to two years. However, this comes with a catch: The interest will be paid out, but only if the issuer HSBC remains solvent.
To secure the return of the invested capital, E.ON shares must be trading at or above the base price of 12.50 euros on the valuation date (06.11.2026). Should this condition be met, investors stand to gain both interest and their full invested capital.
However, if the E.ON share is trading below the base price on the valuation date, a twist unfolds, as stated by HSBC itself: "If the relevant price of the underlying asset is below the base price on the valuation date, the underlying asset will be delivered on the repayment date in the integer number expressed by the conversion ratio. Any fractional parts of the conversion ratio will result in an additional payment." In this scenario, investors will receive the interest but will own E.ON shares instead of their original capital, which may result in potential losses.
Jump right into the product
Now, let's compare this equity-linked bond to a savings account:
Are the high-interest rates with E.ON a good alternative to savings accounts?
Note: E.ON bears no connection to the equity-linked bond, and the interest is not offered by the energy company. Instead, HSBC has engineered a product associated with E.ON stock.
In case savings account interest rates tumble and offer inadequate returns, an equity-linked bond could be a suitable alternative. Before diving in, be aware that such bonds carry higher risk than savings accounts. Investors may even sustain a loss.
In contrast, the interest on the equity-linked bond amounts to 7.30% p.a., well above savings account yields. Additionally, the interest is fixed for two years, whereas savings accounts offer flexibility. However, by choosing the equity-linked bond, investors surrender the dividend, and gains are limited to interest earnings after two years.
In conclusion, this equity-linked bond can serve as a viable alternative to savings accounts, depending on one's risk tolerance. Those unfazed by traditional savings and fixed-term deposits can explore their options in the BÖRSE ONLINE savings account comparison and the BÖRSE ONLINE fixed-term deposit comparison.
Additionally, consider: Up to 7.81% dividend yield: Start the year with attractive dividends in January or The stock market prophets: What Hendrik Leber, Gerd Kommer, Robert Halver and Co expect for stocks in 2025
Please note: The securities in question are debt securities. Investors typically bear a significant capital loss risk, up to total loss, in case the underlying asset's price declines or the issuer (HSBC or E.ON, depending on the product's structure) goes bankrupt. A comprehensive understanding of possible risks and specific product terms can be found in the offering documents (the final terms, the relevant base prospectus, including any supplements, and the registration document ("Prospectus")). These securities are complex products that may be challenging to comprehend.
Risks and Returns
- HSBC E.ON Equity-Linked Bond: Higher risk due to market/equity exposure and potential principal loss. Returns are closely tied to equity performance, and there's credit risk depending on the issuer's creditworthiness.
- Traditional Savings Account: Low risk, with minimal capital loss potential and built-in deposit insurance protection. Returns are relatively low and stable, usually only keeping pace with inflation.
Key Trends
- Equity-linked bonds offer higher risk potential but promise greater returns, especially if the principal is not protected and the underlying equity underperforms.
- Savings accounts excel in safety and liquidity but deliver lower returns, often only maintaining pace with inflation.
If uncertain about the suitability of equity-linked bonds, seek advice from a financial consultant. Remember that such instruments serve as beneficial additions to a diversified investment strategy rather than serving as replacements for traditional savings accounts.
In the rapidly shifting financial world, investors seeking high-interest rates and secure alternatives to traditional savings accounts may find the E.ON equity-linked bond appealing. Offering up to 7.30% interest per annum for two years, this bond could be a suitable choice, given the potentially lower interest rates expected in savings accounts for 2025. However, it's crucial to be aware of the risks associated with equity-linked bonds, as they carry higher risk compared to savings accounts and investors can potentially incur losses. Explore options in the BÖRSE ONLINE savings account comparison or the BÖRSE ONLINE fixed-term deposit comparison as well, considering their lower risk and stable returns.
