Deposits
Transactional
- Current Account with checking facility or Savings Account
- With statement or a passbook.
- Transact at branches or self-service banking facilities (egs ATM, Internet Banking, Phone Banking or Cash Deposit Machine).
- On-Demand withdrawal at branches or self-service banking facilities. Allow salary credit, GIRO, bill payment facility or NETS transaction.
Special Savings
- Internet-only account or with regular savings feature (requires a fixed sum to be deposited monthly).
- Usually pays higher interest Some restrict or disallow withdrawals.
- Those which allow withdrawals normally impose a fees or pay lower interest.
Fixed/Time Deposit
- Funds have to be maintained for a fixed tenor.
- Interest rate is also fixed upfront at placement.
- Premature withdrawal will result in no / lower interest. Some may impose a penalty fee.
Deposit Insurance
From 1 April 2006, deposit accounts held by individuals and charities are insured by the Singapore Deposit Insurance Corporation (SDIC) for up to $20,000 in aggregate across specified accounts in each bank for each depositor under the Deposit Insurance Act. Central Provident Fund Investment Scheme accounts are separately insured for up to $20,000 in aggregate for each depositor.
Foreign currency deposits, structured deposits and accounts earmarked or held as collateral are excluded from insurance coverage.
Government Guarante
From 16 Oct 2008, all Singapore Dollar and foreign currency deposits of individual and non-bank customers in banks, finance companies and merchant banks licensed by the MAS are fully guaranteed by the Singapore government until 31 Dec 2010.
Structured deposits do not enjoy Government Guarantee.
What are Structured Deposits?
Tenor
Structured deposits have ‘tenors’ or maturity periods that usually start from as short as a year to 10 years or longer, although such lengthy periods are rare.
When investing, you should consider the length of time you are able to set your money aside for investing
Whether the issuer has the option to redeem the deposit early
Offer Period
Structured deposits are usually offered in individual portions known as ‘tranches’.
Each tranche has either a fixed offer period or are available until the tranche is fully subscribed. However, different tranches may come with differing features and returns.
Investment Returns
What are the maximum/minimum returns from this product?
How is the return linked to the performance of the underlying assets/markets
What is the formula to determine returns; should the worst-case scenario happen, is the return acceptable?
Other features
Is there a ‘cooling off’ period for investors?
Is early withdrawal allowed and what are the costs involved?
Diversify risks and enhance yields
can improve overall returns of a portfolio by broadening exposure to other financial instruments without assuming excessive risk
Potentially higher returns
as compared to traditional fixed deposits, especially in a low interest rate environment
Exposure to asset/markets not easily accessible by retail investors
e.g. market indices, foreign equities, bonds, interest rates, commodities (crude oil, gold, wheat)
Protection of Principal
when held to maturity
Liquidity Risks
Bear in mind your liquidity needs as investing in structured deposits usually tie up your funds for a period of time. An early withdrawal may result in the loss of part of your returns and/or principal.
Issuer Risks
Are you comfortable with the credit standing of the issuing bank as your funds will be deposited with them for a period of time
Market Risks
As structured deposits are linked to exposure of underlying assets/markets, their returns are therefore determined by the performance of these underlyings. Note that past performance is not indicative of future performance
Reinvestment Risks
In cases where the issuer is allowed to exercise the early redemption option, you may be exposed to the risk of having to invest your money at a lower rate compared to when you first invested and the maximum returns you receive may also be capped
