Capital guaranteed product

If you want your capital to be guaranteed, it is better to buy government bonds. You can get about 18% in total over 5 years.

If you buy any structured product that is "capital guaranteed", you are likely to get a return of less than 10% over 5 years. The cost of structuring and marketing the product will take away up to 10% in total, leaving you with a smaller return.

In most cases, the product issuer will invest a major portion of the money in government bonds or similar instruments to avoid take a risk exposure.

The "structuring" does not improve the product. It adds to the high cost, and is deducted from your return.

Many investors in these types of structured product have obtained a poor return over the past seven years.

If you are offered any capital guaranteed product, ask a few questions, such as:

1. How does the issuer invest the money?
2. What is the charges taken away to structure and market the product?
3. What is the chance of earning a higher return, and what is the amount of the higher return?

When you get the honest answers to these questions, you will realise that the product does not give any value to the investor.