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Jun 29, 2009

POSB Invest SingGrowth Account

POSB Invest SingGrowth Account

New investment product from POSB bank is highlighted for your information by Singapore Savings Account Rates.

Investors need S$5,000.00 to start the POSB Invest SingGrowth Account.

Payout of POSB Invest SingGrowth Account:

Year | Fixed Payout | Bonus Payout
Year 1 = 2.78% -
Year 2 = 1.08% 0.50%
Year 3 = 1.18% 1.00%
Year 4 = 1.28% 1.50%
Year 5 = 1.38% 2.00%

Bonus payments will happen only when the 4 underlying equities (upon which this structured product is tied to) rises 15%.

The 4 equities are Singapore blue chip companies:
1) Singapore Telecommunications Limited,
2) United Overseas Bank Limited,
3) Singapore Press Holdings Limited and
4) SembCorp Industries Limited.

POSB Invest SingGrowth Account is an approximately 5-year SGD equity-linked structured deposit. It is a structured product from POSB (part of DBS), not a savings account. It means that the interest quoted and even your capital are not guaranteed. If POSB closes shop within the five years of this product life, you lose everything in POSB Invest SingGrowth Account

What then is attractive about POSB Invest SingGrowth Account?

You get interest payments from POSB Invest SingGrowth Account of about 7.70% (because the tenure is not exactly five years) over the five years if no redemption occurs. That is about 1.54% per year of interest earned. Bonus payments only occur when underlying stocks rise 15% during a specified redemption date some time in the future. At that future fixed date, you potentially may receive up to 2% bonus payout (which is 0.4% per year).

One final consideration about POSB Invest SingGrowth Account. Structured deposits (e.g. POSB Invest SingGrowth Account) are excluded from insurance coverage under the Singapore Deposit Insurance Act (Chapter 77A) and the guarantee by the Singapore Government, and carry risks not normally associated with ordinary bank deposits. You should therefore not treat the product as a substitute for ordinary savings or fixed deposits.

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