Poor return for 5 years

Dear Mr Tan,

Five years ago I placed $10,000 in the Fix-It Fund. On maturity, I received an interest of $433. I was disapointed.

To date this is the third investment made through a bank. This was the best returns so far. The other 2 funds performed much worse.

REPLY:

You received a return of 4.3% for 5 years on the Fix-It Fund. This is 0.8% per year.

If you have invested in secure government bonds for 5 years, you would have obtained about 15% for 5 years. The Fix-It Fund probably gave a poorer return, due to the high expenses (which are taken away from your return).

The other two funds performed worst, for the same reason.