Does structured deposit belong to wealth management or deposit?

World Health:Common bank deposits include demand, time, large certificates of deposit, structured deposits, etc. You may be familiar with time and demand deposits, but you a...

Jul 28,2021 | Editha

Common bank deposits include demand, time, large certificates of deposit, structured deposits, etc. You may be familiar with time and demand deposits, but you are unfamiliar with structured deposits. How big is the risk?

Structured deposits have been launched for many years, and only after the new regulations on asset management came into effect in 2018, requiring banks to stop issuing capital-protected wealth management, structured deposits have exploded, and structured deposits are considered the best alternative to capital-protected wealth management products, and are also regarded by major banks as an important tool for collecting deposits.

There is a difference between structured deposits and regular deposits. Most of the funds are used for credit or investment in low-risk products to get more stable returns, while a small portion of the funds are used for investment in high-risk and high-return products to get higher returns, for example You buy 100,000 Yuan structured deposit, the bank will deposit 98,000 in fixed term, the remaining 0.2 million to buy financial derivatives, such as stock index, futures, options and other derivatives, here the 98,000 is capital preservation, the remaining 0.2 million if profit gain will be much higher than the fixed deposit, of course, there is also the possibility of loss, so the expected return of structured deposit is volatile. The level of expected return depends on the performance of derivatives.

Structured deposits are risky in comparison with ordinary time deposits, and the size of the risk depends mainly on the proportion of investment in financial derivatives, so you should read the product contract when buying structured deposits and understand the type of derivatives invested and the proportion.