1. Total Guaranteed Fixed Interest of 9.5% of the Principal Amount over 5 years and 11 months (equivalent to an effective interest rate of 1.6091% per annum)
2. 100% Principal Amount guaranteed when held to maturity.
3. Minimum investment of $5,000
This structure product has a bonus interest component linked to 5 Singapore companies' shares price performance:
Potential Maturity Bonus Interest of 4% linked to 5 Singapore Company Shares
| Shares in Underlying Basket | CapitaLand Limited ("CAPL") Keppel Corporation Limited ("KEP") Oversea-Chinese Banking Corporation Limited ("OCBC") SembCorp Industries Limited ("SCI") Singapore Telecommunications Limited("ST") |
Assuming an investment amount of S$10,000, held till maturity:
1. Best case scenario - If all 5 stocks are at least 93% their initial values:
Best Case Scenario (Maximum Interest Potential)
| |||
End of Year
|
Guaranteed Fixed Interest Rate on Principal Amount
|
Maturity Variable Interest Rate on Principal Amount
|
Total Interest Payable
|
1
|
|
|
|
2
|
1.7%
|
-
|
1.7%
|
3
|
1.7%
|
-
|
1.7%
|
4
|
1.7%
|
-
|
1.7%
|
5
|
1.7%
|
-
|
1.7%
|
At maturity
|
-
|
4.0%
|
4.0%
|
Total interest payout
|
8.5%
|
4.0%
|
12.5%
|
Principal + Interest payout
|
S$10,000 + S$850 + S$400 = S$11,250
| ||
2. Worst case scenario - If any one of the 5 stocks is less than 93% their initial values:
Worst Case Scenario (Minimum Interest Payable)
| |||
End of Year
|
Guaranteed Fixed Interest Rate on Principal Amount
|
Maturity Variable Interest Rate on Principal Amount
|
Total Interest Payable
|
1
|
|
|
|
2
|
1.7%
|
-
|
1.7%
|
3
|
1.7%
|
-
|
1.7%
|
4
|
1.7%
|
-
|
1.7%
|
5
|
1.7%
|
-
|
1.7%
|
At maturity
|
-
|
1.0%
|
1.0%
|
Total interest payout
|
8.5%
|
1.0%
|
9.5%
|
Principal + Interest payout
|
S$10,000 + S$850 + S$100 = S$10,950
| ||
The bonus interest for Structured Deposit 2013 Series (2) is greatly reduced. Instead of giving out bonus interest every year, there is only the maturity variable interest remains. So, instead of the total 19.3% interest for Structured Deposit 2013 Series (1) best case scenario, the total interest for Structured Deposit 2013 Series (2) best case scenario is only 12.5%.
Yes, your principal amount is guaranteed, but it is also locked in for the next 5 years and 11 months. There is a loss of liquidity, if any other opportunity arises.
I have mentioned in my earlier post that the additional 2% bonus interest for Structured Deposit 2013 Series (1) is not easy to get. You would need all of the 5 stocks to be 105% over the initial entry price in order to get the 2%. And it is 2% or nothing, there is no in-between bonus.
Structured Deposit 2013 Series (2) has addressed this issue. However, now there is only the maturity variable interest remains. The 4.0% maturity interest for the best case scenario is pathetic and not even 1% a year if you averaged it out for the whole tenure term. Lastly, any of the 5 stocks not above 93% the entry price and your maturity variable interest becomes just 1.0%.
Lastly, the interest rate 1.7% is fixed, which means it won't get higher with market fluctuation. Currently, ICICI Bank is offering 1.50% p.a. for FD (<$50,000) on 36 months tenure term.
This structure product supposed to end 14th September, but is it really a "smarter way to invest"?
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