Tan Kin Lian's Blog: Capital protection is not "capital guaranteed"

Saturday, October 04, 2008

Capital protection is not "capital guaranteed"

Dear Mr Tan,

I have invest in DBS Note 10 by Capitaland recently. The consultant told me this note are like bond type which are low risk and principal protected unless Capitaland file for bankruptcy.

I am worried now with all these events like DBS note 5 and minibonds. Is it true this note 10 is principal protected? Please advise.

I call my DBS consultant to check if i sell how much will I get back. She replied I can only take back 90% of the amount that i invested. Can you advise me what should I do as I have little knowledge on investment. Should I sell or hold?

REPLY
I am not able to give advice on whether to hold or sell. You have to make your own decision, as it is your money.

Capital protected means that they will "try" to protect your capital and is not the same as "capital guaranteed".

8 comments:

Anonymous said...: I think one of the appointed person has to handled several FI! IS IT POSSIBLE?; October 04, 2008 12:30 PM
Anonymous said...: The main question is whether you think capitaland will become bankrupt during the lifetime of highnote 10 which I understand is 2 or 3 years. If capitaland survives this period, then your investment is safe. So pray hard.; October 04, 2008 2:05 PM
Everlearning said...: These days, banks operate its business like a gambling dens. This is another fund that pegs towards whether the Company goes kaput.
Why are the banks using our hard-earned money or savings to bet. Are they gamblers or what? How about DBS betting on our casinos' projects whether they are going to be profitable or not? It is plain stupidity or they just enjoy making FUN of us? I really have had enough of their rubbish using terms like Capital protected, Capital guaranteed, or Principal protected, Principal guaranteed.; October 04, 2008 4:23 PM
Anonymous said...: To ordinary folks, both will seem d same. Unforunately, thes group will land up losing more often.; October 04, 2008 6:57 PM
nhyone said...: If you don't like how the structured product does to earn the interest, you can always choose not to invest in it.

In that way, the bank will not be able to use your money to "gamble".; October 04, 2008 6:59 PM
zhummmeng said...: So is insurance companies. It is a gamble against policyholders that all of them do not hold for whole life and to die to make claim. This is no joke.If all policyholders do insurance companies will go bankrupt.
Ask the actuary.Whole life products are so designed with a lot gambling elements in them.
This is where insurance agents lie about WL products. They are taking bets on behalf of the company. The company meantime lay enticing but dubious perks like conversion to annuity at 60 years with extra 5%.
This is to prevent policyholders from holding for whole life because upon death the company payout proceed is a lot more than the extra 5% given as incentive.
Bu the fools and suckers are still the consumers who beleive this argument and the greedy agents laugh all the way to the bank.; October 04, 2008 8:24 PM
Everlearning said...: Back to talking about insurance, the first blow and now the second blow from the banks. A simpleton like me also would not believe in the non-guaranteed terminal bonus.
Yah, see your point, must keep the WL till I die and surely my children will inherit a lump sum of money from it.
How to place trust in these institutions. Suka-suka change policy-making that suits them at our expense. CPF scheme also. What else is there to believe?; October 04, 2008 10:33 PM
Anonymous said...: Came across forum where Guaranteed Fund is not guaranteed:

http://forums.hardwarezone.com.sg/showthread.php?t=2107123; October 04, 2008 10:53 PM