Tks for your angle on this product. You have a point there.

One would have thought that the easiest way for POSB to raise money was to simply raise its savings and FD interest rates. But then, other banks may also do likewise. Perhaps POSB is trying to create a competitive advantage by introducing Invest SingGrowth.

The reason why I (and many others) are suspicious is due to the gross negative image of FIs over the last 9 mths. It will take time for FIs to regain their trust.

Tks again, for your views.

It’s a 5-year lock in so they would have to give better rates than a normal FD.

Question:

1) If you can “borrow” money at 1.5% pa and lend it out at 4% p.a., how much money would you want to borrow?

2) If your FD rate is very low and not attracting as much capital as you like, what would you do? Create an alternative product to attract capital from the FDs that people have in other banks.

POSB is not filthy rich. Recall that DBS just did a rights issue a few months back to raise capital. More capital is good in the current climate.

What is the true reason for POSB to launch Invest SingGrowth, now? Surely it does not need the cash as it is filthy rich. It does not say how it is planning to use the funds raised. Is POSB trying to make amends for the screw up caused by DBS?

The only risk I see is when POSB goes bust (very unlikely) in which case investors lose their principal. Failure of any of the 4 underlying entities also does not constitute a Specified Redemption Event. The annual Fixed Payouts are not subject to market nor performance factors. No other risk is mentioned. So, if one is happy with min 7.7% interest over 5 yrs (still better than FD), isn’t this “safe” product a good deal? Or is it too good to be true?

This is POSB’s own product. Why would POSB want to pay more interest on this product when it is already paying paltry interest to millions of customers? I suspect there is an ulterior motive behind this product but I can’t put a finger on it.

TM Asia Life is formerly Singapore’s Asia Life. You have heard of them? They were bought over by the Tokio Marine Holdings, a big insurer from Japan.

For HSBC offer, you just have to look at the annualised yield.

http://www.martinlee.sg/what-i-meant-by-annualised-yield/