POSB Invest Equity Series 1 is a 4-year 11-month Structured Deposit that was recently launched by POSB.
The POSB Invest Equity gives fixed payouts over the term with the potential of a bonus payout if three Singapore blue chip stocks (SGX, SIA and Keppel Corp) perform well.
The fixed payouts are as follows:
- Year 1 : 1.38%
- Year 2 : 1.38%
- Year 3 : 1.38%
- Year 4 : 1.38%
- Year 5 : 1.86%
Assuming no bonus payout, the effective interest rate over the period of the investment is 1.48% p.a. (as given on POSB website).
If the prices of ALL three blue chip stocks are 20% higher compared to the prices at the start, then a bonus payout of 2.5% will be given. With the bonus payout, the effective interest rate works out to be 1.96% p.a.
A minimum of $5000 is required to invest in the POSB Invest Equity Series 1. As this is a structured deposit, the investment will not be insured by the Singapore Deposit Insurance Corporation in the event POSB goes bust.
5 comments
VSL says:
January 22, 2010 at 8:05 pm (UTC 8)
Somewhat similar to this, CIMB has also launched a Structured Deposit called CIMB CapitalGuard Series 1. It seems a better product in the flwg ways:-
* shorter tenure of 4.5 yr
* effective interest is 1.67 % pa
* total guaranteed interest over the tenure is 7.4 %
* additional possible potential bonus interest of 4.5 %, based on only two stocks (China Petroleum and BHP Billiton) performing better than initial valuation
* special bonus catch-up feature in case bonus is missed on specified date
Details at http://www.cimbbank.com.sg/index.php?ch=sg_per_wm&pg=sg_per_wm_sd&tpt=cimb_sg
This seems more attractive than POSB Invest Equity Series 1. Only concern here is POSB is less likely to go bust compared to CIMB.
lioninvestor says:
January 24, 2010 at 2:10 am (UTC 8)
Hi VSL,
The CIMB structure is superior as
1) it gives 2 shots at earning the bonus interest.
2) The threshold is only 100% of the initial level.
3) Fewer stocks so higher chances to achieve it.
Of course, we also have to take into account the quality of the 2 companies.
Jasmin says:
January 25, 2010 at 7:50 am (UTC 8)
What can CIMB earn since it is a better product than the other, as this translates to better return for clients?
VSL says:
January 25, 2010 at 10:11 am (UTC 8)
Hi Jasmin,
This is my reading of the situaion. CIMB is the newest kid on the block. They have only 2 branches, no shared ATM network, and are trying to expand their presence (subject to approval by MAS). To make up for their limited presence and gain goodwill, they are offering slighter better products than the competition.
CIMB CapitalGuard Series 1 is one example. CIMB also offers the highest savings (not FD) rate of 1% pa with 100% liquidity if you open an a/c with min $250k. Besides CPF savings (which have higher interest rates but less liquidity), I think no one else in this tiny-red-dot offers a better deal for a 100% risk-free investment with full liquidity.
These are my personal views. Pls correct me if incorrect.
Jasmin says:
January 25, 2010 at 11:12 am (UTC 8)
On a side note, I think CIMB’s credit card is free of annual fees for life.
(Please reconfirm!)