Structured deposit

My friend brought back a brochure of a structured deposit offered by a big local bank. It contains about 10 pages of explanation. It offered an interst rate of around 1.5% per annum and require the investment to be locked up for a few years.,

I advised her not to invest in this type of structured deposit. Why should a consumer have to read some many pages of conditions that are written by the bank through their lawyer? Surely, there must be some catch somewhere?

It is better for the consumer to take the risk and invest in a low cost investment fund. The risk can be reduced by following the principles set out in Practical Guide on Financial Planning.

If the consumer finds the market to tbe too high now, or that the economic situation is uncertain, it is better to keep the money in a savigns account (earn 0.125% per annum) and wait for a better time to invest in the fund. There is no point to lock up the monty for a few years and earn just 1% per annum (and still be subject to conditions that is not so transparent to the consumer).

Tan Kin Lian