Current market turbulence has had most investors running for cover. Just when things looked as if they were stabilising, it all got rocky again. This uncertainty is definitely forcing people to rethink their attitude to investing and their capacity to lose money.

Realising that the time of skyrocketing share prices is over, some are now looking for an iron-clad guarantee that their money is going to be there when they need it in, say, five or 10 years.

A term deposit with a bank or other ADI - Authorised Deposit-taking Institution - where the rate of return as well as the original amount is guaranteed for a nominated period, is one of the best and cheapest tools for making sure you get your money back at the end of a specified term. The downside is that the capital investment may not increase sufficiently over time to keep up with inflation.

Another increasingly popular way to ensure you get at least your initial investment back comes in the form of capital-protected or structured products where there is the potential for capital growth but the downside is minimal.

The performance of many of these products might not be great (figures from ASIC show the 10-year return for a capital guaranteed product ranged from 4.8 to 5.2 per cent in the year to June 30, 2007, compared with 7.2 to 9.2 per cent for growth products) but they don't lose value. But their costs can be quite high, so are they worth it?

Ironclad

Those who invest in products with a capital guarantee or capital- protection element are effectively buying some insurance that they will, at some point, get their initial investment back.

Not surprisingly, there are costs involved and they vary considerably, depending on the structure.

While it is not essential to understand the intricacies of the protection mechanism used, you should probably try to find out how much you are paying to have most of your money invested in cash.

Sure, you might be getting some investment exposure to an exotic, potentially high-returning asset class in a high-risk part of the world, but is it worth the additional cost?

Maggie Callinan, head of research with ING research house Financial Facts, suggests that investors and advisers should take note of whether products are well explained and easy to understand; investment options are well-diversified; and, of course, their fees.

One attraction of capital-protected products is that investors might find it easier to borrow to invest in them.

Since May 31 this year, investors in these products have been eligible for a tax deduction on interest charged, up to the Reserve Bank of Australia's indicator rate for standard home loans - now at 9.45 per cent a year.

At what cost

Colin Atkin, a fund analyst with ratings agency Standard & Poor's, says every product's fees will vary. Some will offer better value than others. Some may have an upfront fee of say, 0 to 3 per cent.

Others charge a protection fee of 0.75 to 3 per cent, an administration fee of 1 per cent or a fund manager's fee of 1 per cent.

If it is a loan product it will have a base interest rate.

Then there is the commission that will be paid to the financial adviser who is selling the product.

You also need to calculate the product's cost against the expected target, or benchmark return.

For example, if the total cost is 3 per cent (and this is not uncommon) then the product would need to generate a return of more than 11 per cent for it to be worth your while to make sense to be investing in it, rather than cash.

Atkin says the transparency of the product is an important part of the decision-making process.

"If you don't understand what you are paying for the product, then it is probably a good place to question whether you should be investing in it," he says.