Q:

what are the pros and cons of structured deposits?

This morning, I came across the term, structured deposits. As I am still learning about finance, I am quite curious on different types of deposits.

In layman's terms, What is a Structured Deposit?
What are the pros and cons?
How can someone manage its downsides?
What's the differences between these and a Fixed Deposit?
and extra tips that I haven't covered in my questions.

A:

They are a derivative investment, with no single set of rules. i.e. one must read the prospectus to know what the terms are for any given product. By "derivative," I mean the return is based on something else, while not necessarily being a direct investment in that 'else.' 
The pro is you can make money. The con is that you are not likely to really understand the risk/reward. These are not for the typical investor.
By avoiding them
They are not a CD or fixed deposit. They are contrived. See my example below.
If my response in answer 3 wasn't clear, "do not buy such products."

Say we are in 'normal times.' Passbook rates are 5% or so. Longer rates, 6-7%. I offer you a product with these terms, for $10,000 I will return a "Guaranteed" $10,000 in 6 years and based on the stock market, 1% for every 2% the S&P is up beyond 10% at maturity. As the seller of this product, I take $6666, and buy a fixed investment, 6 years at 7% in treasuries will return the $10000. Really. I then take the $3334 and buy out of the money calls on the S&P each year to capture the gains, if any, and to deliver on my promise. 
This is one example of a structured deposit offering. They can have nearly any terms one can imagine. Tied to any product. S&P, Crude Oil, Gold. Whatever. 

