Lesson learned - Just to share

[ysyj48]

ehh u guys are scaring me. i bought a SD from ocbc 2 years ago. it is a 6 yr interest rate linked SD. pays u interest every 6 mths.
1st n 2nd tranche: 1.25%
3rd n 4th tranche: 1.3% and slowly increase until last tranche (12th tranche) is 2% or something like that.

so far hv been receiving the interest every 6 mths as promised, so far received 2 or 3 times already. the booklet also said that as long as i dont do early redemption, can get back the principal.

this kind safe or not???

 

[kyteo79]

ehh u guys are scaring me. i bought a SD from ocbc 2 years ago. it is a 6 yr interest rate linked SD. pays u interest every 6 mths.
1st n 2nd tranche: 1.25%
3rd n 4th tranche: 1.3% and slowly increase until last tranche (12th tranche) is 2% or something like that.

so far hv been receiving the interest every 6 mths as promised, so far received 2 or 3 times already. the booklet also said that as long as i dont do early redemption, can get back the principal.

this kind safe or not???

Safe lah ... but last year or so they might not give any interest.

To me i can get better returns...

 

[frenchbriefs]

ehh u guys are scaring me. i bought a SD from ocbc 2 years ago. it is a 6 yr interest rate linked SD. pays u interest every 6 mths.
1st n 2nd tranche: 1.25%
3rd n 4th tranche: 1.3% and slowly increase until last tranche (12th tranche) is 2% or something like that.

so far hv been receiving the interest every 6 mths as promised, so far received 2 or 3 times already. the booklet also said that as long as i dont do early redemption, can get back the principal.

this kind safe or not???

the word tranche reminds me of collaterallised debt obligations and credit default swaps from michael lewis's the big short.....1st tranche is AAA rated mortgage bonds.....2nd tranche is bb rated.....3rd tranche is BBB rated total garbage.....4th tranche is take the 3rd tranche BBB rated junk and split into 3 parts and name it AAA,bb and BBB again......and keep rinse and repeat.

essentially u are buying the garbage of the garbage of the garbage.remember garbage is super high risk thats why it pays higher interest....but the debt owners are one broken refrigerator or one late car payment away from default.u are lending tens of thousands even hundreds of thousands of dollars to people who work at mcdonalds and cannot afford to make their interest payments.

 

[Shiny Things]

the word tranche reminds me of collaterallised debt obligations and credit default swaps from michael lewis's the big short

That's not what we're talking about here.

 

[focus1974]

Our MAS, if they are serious..., should just ban the word "DEPOSIT" on any structured product.

The RMs and peddlers are always using .. "Uncle auntie.. this one is a deposit" when it is actually a structured product.

A lot of people.. (not the uneducated, but even educated office workers) get enticed by the good return on the Deposit. and they also keep asking the peddlers whether it is safe.. capital will return or not.. and the peddlers will always tell them ... ..safe.. like deposit... as long as you hold for 6yrs..

Just remove tthe freaking deposit word and call a spade a spade.

My dad just went bank a few days back..and also got peddled the same product.. interest-linked structured deposit... and he also beleived it is as safe as a deposit. the rm say one..

 

[Perisher]

Our MAS, if they are serious..., should just ban the word "DEPOSIT" on any structured product.

The RMs and peddlers are always using .. "Uncle auntie.. this one is a deposit" when it is actually a structured product.

A lot of people.. (not the uneducated, but even educated office workers) get enticed by the good return on the Deposit. and they also keep asking the peddlers whether it is safe.. capital will return or not.. and the peddlers will always tell them ... ..safe.. like deposit... as long as you hold for 6yrs..

Just remove tthe freaking deposit word and call a spade a spade.

My dad just went bank a few days back..and also got peddled the same product.. interest-linked structured deposit... and he also beleived it is as safe as a deposit. the rm say one..

My parents tio too... seems they like to aim the elderly... jin evil... Mine is at OCBC... keep recommending complex stuff each time they go when my parents only want simple FD...

I have to keep telling my parents, don't sign anything until I went through it.

 

[kyteo79]

So mean my UOB 5yr 11 months structural deposit might die in case something went amiss ?

Principal guranteed leh ..

Dun scare me ...

 

[chuanz]

So mean my UOB 5yr 11 months structural deposit might die in case something went amiss ?

Principal guranteed leh ..

Dun scare me ...

Principal is guaranteed if UOB is around.
Structured Deposit not covered by SDIC, so no insurance, so to speak.

 

[focus1974]

So mean my UOB 5yr 11 months structural deposit might die in case something went amiss ?

Principal guranteed leh ..

Dun scare me ...

here you go.. dont scare you..
https://sg.finance.yahoo.com/news/Understand-capital-guaranteed-yahoofinancesgwp-965056139.html

A capital-guaranteed product is a structured product created by a bank to be sold mainly to retail investors. It is issued usually for a term of 5 years, is invested in the manner spelled out in a prospectus and carries a guarantee from a bank that the invested sum will be returned on maturity.
Several products of this nature were created and sold by many banks in Singapore to retail investors during the years 2000 to 2005. The interest rate on bank deposits fell below 2 percent during this period and investors wanted a higher return for their savings, without taking risk. The capital-guaranteed products appeared to meet their needs.
Most retail investors did not read the prospectus as they trusted the bank guarantee and the assurances given by the marketing staff of their trusted bank.
Several billion dollars were invested in these products during these years. On the maturity of most of these products, the investors were disappointed with the meagre returns — usually less than 2 percent for 5 years, or 0.4 percent per year. This was even lower than the yield on fixed deposits.

 

[shareholder]

As a shareholder, recommend to all of you the best product. Nothing can compare with the power of shares!
Share more earn more!

 

[tiny]

Just to share my experience.

My mom was enticed to buy a structure deposit from DBS Bank called Bonus Account.
It promised 20+% over 5 yrs, everything guaranteed. It was attractive in a low interest rate scenario.
The based product was the German stock market.
She bought in Jan and when the 1st quarter statement arrived, she couldnt fathom how come it lost 10% of its value.
I checked and found the DAX30 index had risen over 6% over that period and the EUR/SGD rate also appreciated 3% at the same time. That means the value of the SD should be technically have risen about 10% but instead, the value of the "investment" had fallen by the same magnitude.

I called up the bank for an explanation. Neither the sales gal nor the branch manager could explain. To cut a long story short, this matter went up all the way to the head of corporate sales, treasury & PR dept when I launched a complaint to ABS and cc to the MOF 9 mths later. No one in DBS could give an explanation why their SD was still in the negative while EUR & their stocks were burgeoning.

They returned my mum the money intact at the end. Wasted my time to deal with useless sales people & the lies they tell.

NB - My experience with ABS is sorely disappointing. They are not a fair mediator but rally in defence of DBS Bank. I should have expected that because ABS was funded primarily by the local banks which means the salaries of the ABS staff was paid in part by DBS. We got lucky because my complaint went up to MOF & I expect they are watching the outcome.

Warren Buffet said - Dont buy anything you do not understand.
(Actually - "Never invest in a business you cannot understand.”)
Dont trust the banks entirely.
Dont trust businesses that make similar wild promises too

You were facing the sales team who do not know much about the mechanics. Many complex financial products have been crafted backend by the brightest minds who were hired by banks and insurance companies. There is a reason why they don't join public service because it is really very very well paid over at the private sector.

 

[ysyj48]

is it right to say that SD is for ppl who dont hv enuf to put into FD to enjoy their high interest rates? cos most FD promo with the good rates need min 20k.

for me, i put in a SD cos i only had less than 10k, and i only want to 'lock up' my money for 5-8 years. but savings acct i/r is way too low. so ppl like me, if SD is not advisable, then what to do with the money? i alr hv a separate stash for stocks/etfs

 

[wts2013]

is it right to say that SD is for ppl who dont hv enuf to put into FD to enjoy their high interest rates? cos most FD promo with the good rates need min 20k.

for me, i put in a SD cos i only had less than 10k, and i only want to 'lock up' my money for 5-8 years. but savings acct i/r is way too low. so ppl like me, if SD is not advisable, then what to do with the money? i alr hv a separate stash for stocks/etfs

hahaha trying to console yourself ha? People who are greedy over the "high interest or returns" for the little money they have get easily conned by the banks to invest in structured deposits lor, hahaha

who says FD pay more interest for min 20k? Savings accounts can also earn higher interest than FD lor for less than 20k, some with a little more effort required lor like pay 3 bills, charge credit card, play merry go round, etc, hahaha

 

[chuanz]

is it right to say that SD is for ppl who dont hv enuf to put into FD to enjoy their high interest rates? cos most FD promo with the good rates need min 20k.

for me, i put in a SD cos i only had less than 10k, and i only want to 'lock up' my money for 5-8 years. but savings acct i/r is way too low. so ppl like me, if SD is not advisable, then what to do with the money? i alr hv a separate stash for stocks/etfs

Treating SD like FD is a totally bad idea.

10k put SSB (Feb 2016) 5 yrs 1.89%p.a., 8 yrs 2.30%p.a
Can redeem with one month's lead time. Capital guaranteed even if you put just 1 month, no penalty. $2 to go in, $2 to get out.

 

[aetherheal]

愿赌服输. People who complain are just sore losers. U were greedy and made the gamble even when you don't understand fully or even know a slightest idea of how it works, who else to blame but yourself? Nobody force anyone at gunpoint to buy SD, you can still put FD. If earn money, will you thank the bank?

 

[kyteo79]

愿赌服输. People who complain are just sore losers. U were greedy and made the gamble even when you don't understand fully or even know a slightest idea of how it works, who else to blame but yourself? Nobody force anyone at gunpoint to buy SD, you can still put FD. If earn money, will you thank the bank?

I dun think anybody is complaining here..
It is just to share and remember not to do this again ...

If bank help me earn big money i thank them. Otherwise no thanks because they earn charges and money on top of my principal. Simple logic. Just take a look around .. How grand their building is all the banks here ... You will know how much they have made...

If gamble then will go MBS/RWS already...

For me, it is just small peanut money to test how this scheme works and apparently this scheme is not for me .. No big deal.
But i still like to share my experience.

Thank you for your input anyway.

 

[ysyj48]

hahaha trying to console yourself ha? People who are greedy over the "high interest or returns" for the little money they have get easily conned by the banks to invest in structured deposits lor, hahaha

who says FD pay more interest for min 20k? Savings accounts can also earn higher interest than FD lor for less than 20k, some with a little more effort required lor like pay 3 bills, charge credit card, play merry go round, etc, hahaha

i am already doing that ocbc 360 thingy, just want to put aside some money that is really untouchable. put in 360 still can withdraw.

lol yes trying to console myself but at the same time want to learn what better ways are there

Treating SD like FD is a totally bad idea.

10k put SSB (Feb 2016) 5 yrs 1.89%p.a., 8 yrs 2.30%p.a
Can redeem with one month's lead time. Capital guaranteed even if you put just 1 month, no penalty. $2 to go in, $2 to get out.

ah true SSB. too bad it was not launched back in 2014 when i bought the SD.

 

[focus1974]

Shiny Master,

This is the structured deposit my dad was introduced to.
So this is really capital guaranteed. and the worse case according to the bank sales is 13.5% over 6 years. annualised should be 2.25%. Not to mention a 3% sales charge they have not factored into their calculation which then works out to minimum of 13.5-3% = 10.5% over 6 years = 1.75% per annum... which is not that great if we expect interest rate to go up higher over the next year and subsequently when you could get fixed deposit at 2% or 3% even.

http://www.uob.com.sg/personal/investments/structured/current_plans.html?s_cid=SD_HBann

How does this type of structured deposit work?
they are buying into underlying 5 Singapore bluechips of DBS, CApitaland, OCBC, KepCorp and SingTel.

I am just guessing, would it be they are taking the dividend yield (probably 3%?) and giving you the 2.5%. And the 0.5% they saved over the 6yrs will equal min 3%. But if the shares do not perform to expectation, they will give only 1% guaranteed at year 6. Which most likely will be taking from the 3% saved up over the 6years.

The part I do not understand is how do they guaranteed the capital when the underlying shares might possibly be negative after 6years. Possible, though it could be higher 6years from now since we are hitting new lows in the stock market this year.

 

[zeroX26]

Shiny Master,

This is the structured deposit my dad was introduced to.
So this is really capital guaranteed. and the worse case according to the bank sales is 13.5% over 6 years. annualised should be 2.25%. Not to mention a 3% sales charge they have not factored into their calculation which then works out to minimum of 13.5-3% = 10.5% over 6 years = 1.75% per annum... which is not that great if we expect interest rate to go up higher over the next year and subsequently when you could get fixed deposit at 2% or 3% even.

http://www.uob.com.sg/personal/investments/structured/current_plans.html?s_cid=SD_HBann

How does this type of structured deposit work?
they are buying into underlying 5 Singapore bluechips of DBS, CApitaland, OCBC, KepCorp and SingTel.

I am just guessing, would it be they are taking the dividend yield (probably 3%?) and giving you the 2.5%. And the 0.5% they saved over the 6yrs will equal min 3%. But if the shares do not perform to expectation, they will give only 1% guaranteed at year 6. Which most likely will be taking from the 3% saved up over the 6years.

The part I do not understand is how do they guaranteed the capital when the underlying shares might possibly be negative after 6years. Possible, though it could be higher 6years from now since we are hitting new lows in the stock market this year.

That's because they are possibly not using the money to buy into that basket of 5 blue chips. Unless this round its explicitly stated that the $ will be used to buy those counters, otherwise at least as of Sep - Oct last year when UOB was selling this, the performance of the basket of stocks was merely used to decide on the amount interest payout for the final year.

In a nut shell, 1) you wont know what they are gonna used the money for and 2) that basket of stocks is merely used as an indicator to decide how much payout you get for the last year.