BIGe pays 3.5%

Mr. Tan,

I cannot understand how come Aviva BIGe can guaranteed interest of 3.5% without sales charges and withdrawal fees whereas no other institution can offer that. Is there any "catch" that I overlook on this product?

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REPLY:

Aviva only guarantees 3.5% for 3 months. Thereafter, they have the right to reduce the interest rate (subject to a minimum of 2.5%).

Although they have to pay out 3.5%, they are able (at this time) to invest a portion fo the fund in the stockmarket to earn a much higher return. They are taking some risk, but it can be covered by their risk capital.

This is also a good way for them to build up a base of customers for their other products.

I applaud Aviva for a good business strategy.