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.