No, it doesn't mean anything.

It just means your investment has hedged against the the Klibor rate surge to beyond a threshold.
Just like buying an option, derivatives product if ABC doesn't happen, you get paid, while if happen, you get nothing.

Th potential risk is KLIBOR shoot beyond 3.85%, at third year, and until fifth year, while the structured product is not called back until matured (why bank want to call back if this happen ),
means one get nothing and only get the 1st and 2nd years, of total 7.85%, and need to wait until fifth year for the product to mature, only get back the money.

7.85% for 5 years, it works out 1.57% pa only, which is worst than FD.

While if everything goes find, you get total of 20.75% which average become 4.15%.

So we may have 3 worst, mid, best scenario, based on the info posted, as I have no info about the product.

1. 0% for 5 years, Klibor beyond 3.85% since first years, you are stucked for 5 years, and get back capital guaranteed after 5 years time, long long wait.
2. 1.57%, if Klibor surge beyond 3.85% at 3rd years until 5th years
3. 4.15%.

I am not saying the product is good or bad, just we need to have various scenario outcome, whether it is good or not, depends on individual preference.

It is unlikely Klibor to shoot beyond 3.85% at near future as OPR still at 3%, but we can't rule out anything entirely.
If Klibor does rise and beyond 3.85% in the future, the structured product return may be less than what FD can offer. This is the risk of it, and most important it is not a FD.

Commit 5 years and get 4.15%?
It is good if interest rate is stagnant or go lower in this 5 years.

This post has been edited by cherroy: Sep 5 2013, 02:03 AM

Thanks for the correction, I taught the table is interest rate given as the I do not have the info in the first place (as pic attachment is not available at the time of posting).

The correct one is those are Klibor upper barrier, while if not shoot beyond, one get 4.5%.

So
best 4.5% pa
Worst 0%.

Yes, FRNID may be another good option to consider, but I always try to remind people that FRNID is never a FD.
Since it is FD thread, therefore need to highlight the issue, just in case many confuse about FRNID and taught it is similar to FD.

The real fact it is not, but a type of investment.

As even some also confuse about insurance saving plan as FD as well.

Btw, OPR maintained at 3%, as expected.

For the new Klibor structured product that I received the info from banker.
5 years 4.5%, if do not exceed the threshold barrier

But I noticed another important line.


This is a big disadvantage clause (I experienced before)

Bank may terminate the product, when situation unfavourable. So no more good yield for investors further.

While when situation is unfavourable to investors, aka when investors get 0% due to shoot beyond threshold barrier, bank may let the product continue to run until mature.

Unless the termination clause is set according to certain condition, then may be fair.
But if termination is based on wish of the bank, then personally won't bother to look further.


This post has been edited by cherroy: Sep 5 2013, 10:44 PM

I do not know the CIMB structured product, so I am not in position to comment.

But to commit a structured product that is 10 years tenure somehow I do feel a bit too long. Just my view.
5 years is already long enough, somemore x2, 10 years, means capital locked in for 10 years and no touch.

Open a new topic for new version. ty.