Structured Deposit

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Ever since the Minibond, High Notes etc saga, many people were skeptical when heard about the product called Structure Deposit (yours truly included). This is not surprising given the horror news on the front page of newspaper daily few months ago saying the tens of thousands of dollars vanished just like that.

My mum was intending to place a FD with OCBC today (don't ask my why OCBC). If you are in the loop, news mentioned about the decrease of our mere 0.25% interest rate on savings account to 0.125% now. As a consequence, rates on FD were affected as well. She wanted a higher interest saving account but at low risk; hence the lady recommend her a SD.

Due to the SD saga, many rules were implemented in the advisory and selling business. One of them is, inter alia, the requirement of at least an 'O' Level education before the customer is able to buy SD product. Therefore, I was called to make a trip down to help her as she only possess a Primary school education certificate.

After doing a brief 30min research, I went down with a skeptical mindset. In my mind, I was already contemplating investing in Index Fund from Lion Global for her. Long story short, after a good 15min of introduction of product by the lady, I decided to give the green light for my mum.

Details about the SD
1) Capital Guaranteed if held to maturity
2) Guaranteed effective interest of 1.55%pa (Compared to 0.75% for FD)
3) Maximum effective interest of 2.05% (The difference is subjected to the performance of the underlying share)
4) 4 years tenor
5) Underlying share was SPC

Surprisingly, the SD factsheet was easy to understand (for me at least), nothing complicated anywhere. Of course, given the low interest rate environment now, this OCBC product is the best available to risk-adverse investors. If your risk appetite is a little larger, most probably you would be better off if you invest in SPC directly given that it gives higher yield at current price and you stand a good chance of capital appreciation in 4 years' time.

Of course, you might argue that the mere 1 to 2 percent will still result in negative real interest rate but hey its the best available according to my mum's risk profile. :)

N.B The minimum subscription is $5000 and the offer period ends on the 2nd to 3rd week of July. Email me if you are interested, I can pass you the contact.

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