Avoid complicated products

Many financial institutions design complicated products that lock you up for many years and give you a poor yield.

They pay a high commission (taken from your investment) to the marketeer, which could be an insurance agent or the relationship manager of a bank.

To hide the poor yield, they introduce several complicated features to distract the investor. If they are transparent, they will never be able to sell the poor yielding product.

Many life insurance products introduced in recent years are designed to be complicated and non-transparent. They give a poor yield to the policyholder.

Some products may give a fairly decent yield, but it comes with high risk. For example, if the underlying investment is risky and can earn a gross yield of 7%, the investor may get a net yield of only 3%, after deducing the high charges which takes away most of the gain. Usually, the investor is not aware about the high risk, as it is hidden in many pages of a complicated document.

Lesson: Never invest in any complicated product, even if it is sold by your trusted bank. Instead, you should invest in transparent product, such as stocks or bonds that are transacted through the stock exchange. If you invest in fixed deposits, you can check the interest rate offered by various banks.