In the last posts, we look at main features and benefits of Structured Investments. The most notable feature of Structured Investments is that can give you potentially higher return than fixed deposits. However it comes with potentially higher risks too.
If you are unsure to choose whether to invest in Structured Investments or Fixed Deposits and would like to know the difference, this post is right for you. The table below illustrate the main difference between Structured Investments and Fixed Deposits.
|Fixed Deposits||Structured Investments|
|Minimum amount required||RM 5000||Floating rate negotiable instruments of deposits – RM 100,000 *
Investments linked to derivatives – RM 250,000
|Return – Fixed interest rate||Yes||Yes but only for investments with minimum interest feature|
|Potential enhanced return / interest (performance pay-off)||No||Yes|
|Full principle sum payable on maturity||Yes||Yes but only applicable for principal protected investments only|
|Full principle sum payable on early withdrawal by depositor||Yes||Investor may lose part of their return and/or capital. The amount to be paid to investors depends on the market value of the underlying assets.|
|Full principle sum payable on early redemption by banking institutions||Not applicable||Yes|
|Risks involved||Relatively risk free||Return can be affected by various types of risks such as interest rate risk, market risk, foreign currency risk and early termination risk.|
|Protected by Malaysia Deposit Insurance Corporation **||Yes||No|
* Floating rate negotiate instruments of deposits and linked to derivatives are structured investments with different requirements, and different features such as contract tenure and tradability.
** Subject to maximum coverage limits as determined by Malaysia Deposit Insurance Corporation.
Source : Banking Info Booklet