Tuesday, April 29, 2008

Misleading Ad

I saw this ad in the Straits Times last week. I'm sure that many people will misunderstood this as a Fixed Deposit Scheme that is capable of giving 2.08% p.a
How can we identify that it is not true? There are 3 lines of words that reveal this:
1) "Guaranteed Coupon"
They did not specify guaranteed Interest, Returns or Yield. They can give a guaranteed coupon of 2.08%, but the underlying fund can be reduced by 2.08% on the same day.

2) "Capital Guaranteed at end of year 2"
If the 2.08% is guaranteed, why they only capital guarantee the capital? So obviously, you can get 2.08% for 2 years but the end of day principal returned to you can actually the initial amount invested minus off your 2 years of coupon.

3) The bonus Coupon payment is dependent on the value of the underlying asset.....
This line clearly implied to us that this is an investment, not like a deposit type of plan.
I wonder how many Uncles and Aunties will misunderstood about this plan...


Anonymous said...

Same misleading ad like revosave to trap poor aunties and uncles. I have seen screaming ntuc poster that says $5000 guaranteed. This is cheating. Every body is cheating, the banks the insurance companies, the insurance agents and consultants. There a lot of cheats. Now we have a society of cheats.

Derek said...

Hi Adrian,

I believe that there is no free lunch in this world. Always be skeptical about such things and always clarify before buying into such a product. If you are still unsure, don't buy it.