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# DBS Invest Choice Account

I chanced upon an advertisement for the DBS Invest Choice Account a couple of days ago. Taking a closer look at the product, I realised that it is almost the same as the POSB Invest SingGrowth Account that POSB launched back in June 2009. You can refer to the POSB Invest SingGrowth Account post for an explanation of how it works.

The reference entities and redemption conditions are all the same. The only difference is that the payout is 0.22% higher in the first year.

 Year Fixed Payout Bonus Payout Year 1 3.00% – Year 2 1.08% 0.50% Year 3 1.18% 1.00% Year 4 1.28% 1.50% Year 5 1.38% 2.00%

Here is a repeat of the earlier exercise of calculating the returns based on a \$100k investment.

Case 1: No redemption event

You will collect:

End of year 1: \$3000

End of year 2: \$1080

End of year 3: \$1180

End of year 4: \$1280

End of year 5: \$101380

Case 2: Redemption event occurs at end of year 2

You will collect:

End of year 1: \$3000

End of year 2: \$101580

Case 3: Redemption event occurs at end of year 3

You will collect:

End of year 1: \$3000

End of year 2: \$1080

End of year 3: \$102180

Case 4: Redemption event occurs at end of year 4

You will collect:

End of year 1: \$3000

End of year 2: \$1080

End of year 3: \$1180

End of year 4: \$102780

Case 5: Redemption event occurs at end of year 5

You will collect:

End of year 1: \$3000

End of year 2: \$1080

End of year 3: \$1180

End of year 4: \$1280

End of year 5: \$103380

Case 6: DBS/POSB goes bust

You will get back nothing as this product does not fall under the Singapore Deposit Insurance Act.

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The actual annualised yield for the 5 different cases are computed as follows:

Case 1: 1.59% p.a. (product matures in 5 years)

Case 2: 2.30% p.a. (product matures in 2 years)

Case 3: 2.09% p.a. (product matures in 3 years)

Case 4: 2.01% p.a. (product matures in 4 years)

Case 5: 1.98% p.a. (product matures in 5 years)

You can use the yield and maturity length as a benchmark to compare against other similar products. Of course, no one would be able to predict which of the 5 cases would ultimately happen.

The yield is slightly higher than the POSB Invest SingGrowth Account but it requires a much higher minimum of \$100k to invest in the product.

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A Singaporean says 10 years ago

Eh, the website says minimum investment amount S\$100,000…

lioninvestor says 10 years ago

You are right. I don’t recall seeing the \$100k min criteria on the website. Either I missed it or they just added it in there.

James Tan says 10 years ago

Hi Lion,

This is interesting. Who does the redeeming ? The bank or the a/c owner ?

lioninvestor says 10 years ago

Hi James,

The redemption will be triggered by the bank if the redemption conditions are met. ie. All 4 stocks are 15% or more above the original price at various fixing dates.

James Tan says 10 years ago

Hi Lion,

Thanks for the info. But let’s say if you had \$100K, where would you park it to collect guaranteed 3% p.a. plus guaranteed principal ?

Regards,
James

Vincent Teo says 10 years ago

Sounds so complicated.

I’d rather invest directly in stock market i.e. buy STI ETF or other high quality blue chips stocks. No need to wonder on what and how the scenarios will happen.