In these products, the risk is basically credit risk i.e. default risk.

(Some of these products come with an embedded option that retail investor grants to the issuer, to give issuer the option to stop paying the guaranteed return — callable bond.)

To compare this risk, I have to assign some numbers. My own rating “system” is exclusively based on brand awareness, influenced by product marketing. I basically disregard all other factors such as

• – credit history, on-time payment record
• – longevity of the business
• – leverage ratio of the business
• – how they generate enough profit to meet this requirement

Now let’s look at the products:

• government bonds — lowest risk.
• bank deposits — risk is negligible
• insurance products — risk is comparable to banks. lock-in period is much longer.
• —– For the above debtors, I basically acknowledge but disregard the risk.
• Lesser known regional banks and insurers, in developing countries — if they offer much higher return I would be suspicious.
• property developers — I basically accept the higher risk.
• unknown entities — very high risk, but I embrace the risk.