Thanks to the fact that I do a lot of training, I do meet a lot of people. Right from the lowest end sales person (who could be a banker or an IFA) to the fund manager.

In my personal finance class I meet a greater variety of people – from simple students to retired persons. One product which is being pushed real hard at these people is FMP – a fixed maturity plan. And it is touted as being “risk free”. I have said this a million times before – “all investments are risky” and fmp is a risky product too!

What are the risks in a FMP?

1. If many of the investors exit in spite of their being an exit load, man could you be the guy who will be holding the parcel when the music stops.

2. Increased return is coming at an increased risk – a BBB kind of paper can become D+ very, very quickly in a recession.

3. One fmp showed an indicative portfolio which was far different from the real (actual) portfolio!