Avoid Structured Deposit

QUESTION FROM A COLLEAGUE

In 2003, my father and I invested $5,000 in a 6-year capital guaranteed investment product called "Enrich Account".

It provides a 3.6% pay-out in the first year and subsequent pay-outs on the Bank's discretion. We received a payout of S$180 in 2003, S$90 in 2004 and no payout in 2005. The current value of the investment is S$4,300. We are tied up till 2009.

I suspect the poor performance is due to its bond investments which are affected by the rising interest rate environment. Although it is capital guaranteed, it ties up our money for 6 years and ultimately gives poor returns.

What is your advice?

LESSON:

This is a good example of structured deposits and the problems with them. I avoid them.

If you wish to invest in a structured product, you should understand how it works. You should also ask the Bank to disclose disclose the minimum and maximum return and the actual returns realised - for each of the structured products which have matured.