I have updated my FAQ on structured products. You can read them here. Advice: avoid investing in structured products, as they have high cost and are not likely to give a good return to the investor.
Structured products are not meant for everyone. As what Mr. Tan said if you don't understand don't touch it. But this doesn't mean it is not good. In your portfolio you may want to include an asset that is risky to enhance the total return just like the banks and insurance companies who invested in CDOs. All investment are bets and so are so called low risk insurance products. The insurance companies bet that there will no claim when they "eat" the bets from policyholders and similarly when they invest in CDOs they are betting that the mortgagees will pay their loans. But unfortunately because of the "greed "to enhance the portfolio return they got burned.Surely the risk was calculated before they poured in the money into them. And for investing in structured products it is the same game. The important thing is knowing what you are in for.Structured products can go each way and therefore not necessary bad and if the probability is in your favour you invest although the outcome is still not known but this is called risk.
Structured products are not meant for everyone. As what Mr. Tan said if you don't understand don't touch it. But this doesn't mean it is not good. In your portfolio you may want to include an asset that is risky to enhance the total return just like the banks and insurance companies who invested in CDOs. All investment are bets and so are so called low risk insurance products. The insurance companies bet that there will no claim when they "eat" the bets from policyholders and similarly when they invest in CDOs they are betting that the mortgagees will pay their loans. But unfortunately because of the "greed "to enhance the portfolio return they got burned.Surely the risk was calculated before they poured in the money into them.
ReplyDeleteAnd for investing in structured products it is the same game. The important thing is knowing what you are in for.Structured products can go each way and therefore not necessary bad and if the probability is in your favour you invest although the outcome is still not known but this is called risk.