How Do “Guaranteed Returns” Work?

Few things are more attractive than “guaranteed returns” – make money and there’s no uncertainty? Sign me up, some might say while others might think it’s too good to be true. The key is really to see who or what is exactly giving the guarantee and in this article I touch on a few products giving such a promise.

Trading App Promos – increased returns with relatively low-risk instruments

In the past year or so, trading apps like moomoo, Tiger Brokers, Webull etc. have been running promotional campaigns offering guaranteed returns. These platforms generally encourage you to invest in money market funds, offering an attractive fixed rate.

Personally, I’m quite comfortable with the risk level of such an arrangement. First, money market funds are relatively low-risk instruments investing in things like bank deposits and government bonds, typically across multiple institutions. In the high-interest rate environment we’ve been experiencing for a couple of years now, these instruments can give pretty okay returns comparable to high-yield savings accounts and fixed deposits.

Second, the guaranteed rate is provided by the trading app company topping up the difference between the actual return and the rate they advertise. If an app promises 6.8% p.a. return and the money market fund performs at 3.5% p.a, the trading app will top up the difference from its own funds.

In my opinion, the risk level remains low while returns go up. We are cheating on the relationship between risk and return… well, for as long as the promo lasts, and these promos usually give their guaranteed rate for about 1 or 2 months. Of course, you need to make sure that the companies you are dealing with are at least MAS regulated so that you know that there are proper processes to handle your money.

Why do these companies offer such enticing deals? It’s probably obvious: customer acquisition and retention. They’re willing to take a hit initially with the hope that you’ll stick around for the long haul and use their app. It’s not unlike credit card companies offering sign-up bonuses and ongoing promos.

Chocolate Finance – 4.2% p.a. currently

Recently launched for the public, Chocolate Finance doesn’t actually say “guaranteed”, but it is currently offering a 4.2% p.a. on the first S$20,000 per user. It’s quite a simple concept – if the underlying funds do worse than 4.2% p.a, Chocolate Finance tops up the difference. Should they do better, Chocolate Finance pockets the difference and that is their revenue source.

Unlike trading app promos which are typically loss leading efforts to bring in new business, the 4.2% p.a. rate is Chocolate Finance’s entire business model right now. This means that they are expecting the funds to do more than 4.2% p.a. on average.

The underlying funds in question bring us up the risk-return graph slightly – we now find ourselves in the territory of investment grade bond funds. “Investment grade” means these companies are rated as likely to repay their debts, and there are hundreds of such entities across the 4 funds that Chocolate Finance is using. I’m quite comfortable with having money in these funds – very big names too – and Chocolate Finance does not hold my money directly. Like every instrument I talk about here, Chocolate Finance is also MAS regulated.

On top of that, I think that Chocolate Finance’s top up brings down the risk a little because in essence, they take over the volatility of the bond funds which can fluctuate in value due to things like interest rate movements. In return, any upside beyond 4.2% p.a. is also taken by Chocolate Finance.

It’s a fair exchange in my books – in this arrangement I am basically settling for a lowered return for lower volatility. I’m happy with this arrangement, though my hope is that Chocolate Finance increases the S$20,000 limit to S$50,000 at least.

BigFundr – around 6% p.a. guaranteed by Maxi Cash

Coming into prominence recently, BigFundr is offering rates of around 6% p.a. guaranteed. From time to time, BigFundr offers deals for subscription. Users can start with as low as S$1,000, and the rates and tenure depend on each deal.

Like Chocolate Finance, BigFundr makes its money from this arrangement. Unlike Chocolate Finance, however, BigFundr does not invest money into funds. Instead, each deal represents a real estate project that requires funds, and investors are essentially pooling funds to loan to these projects. BigFundr describes a few layers of protection that investors can expect:, but ultimately Maxi-Cash is itself as a company guaranteeing investors’ capital and returns. It should go without saying that BigFundr/Maxi-Cash gets their cut for facilitating this entire operation.

The way I see this setup is something like a friend of yours telling you to lend money to his uncle who is willing to pay interest. Don’t worry, your friend says, if my uncle doesn’t pay you back, I’ll return you the money plus interest. Lending money to his uncle is probably quite risky – you don’t know the uncle very well, and you wonder why he is okay with paying a high interest to borrow money.

Having your friend as the guarantor does decrease this risk. The question then becomes whether you trust your friend to make good on the guarantee should his uncle default. It is hence something like lending money to Maxi-Cash to begin with.

Would you want to loan money to Maxi-Cash at around 6% p.a? If yes, BigFundr is an easy way to do it, and you can start with just S$1,000. Currently, I don’t think it’s necessarily a bad or very risky deal, but I don’t see myself putting my own funds into it for the time being. If you wish to, just signing up with code R12667K and get S$10 for activating your account. I will probably do a deeper dive into it if quite a few people sign up.

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Hopefully, this article clears up a few doubts I’ve seen about guaranteed returns. A few see the word “guaranteed” too optimistically, thinking everything is safe as long as someone throws out that word. Some others may be too sceptical, missing out on good deals that they could have benefited from.

As usual, stay subscribed for more updates and great deals to earn more from things like credit cards, savings accounts etc.

Seth Wee was a licensed financial adviser representative from 2009 to 2025, with over 16 years of experience in Singapore’s financial advisory industry.

He started Sethisfy.com in 2019 to share practical insights on credit cards, banking products, and miles strategies, helping readers identify financial products that deliver the best value. Seth has been featured in CNA, Channel 8, Today, and a host of other publications. In 2025, he was also part of a panel at CPF’s Ready For Life festival.

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