So many people have fallen for these bad financial products. And they learned a painful lesson. It has been very costly for them.
Lesson 1.
Do not invest in structured deposit. They are structured to look attractive, but are usually quite deceptive. The product creator and distributor made high profit for themselves. Their large charges are hidden in the complicated structure. You will only find out after a few years. By that time, you will realise that most of the gains have been eaten away by the charges. If the market perform badly, you have to carry the loss.
Lesson 2.
Avoid investing through financial advisers. They will be able to find unit trusts that perform well in the past (from more than 300 unit trusts available in the market). The probem is that these unit trusts are NOT likely to perform well in the future. These unit trusts are likely to have high charges (2% to 3% per year). The financial adviser recommend them to you, because they get a trailer fee of 0.5% to 1% every year. This comes from your earnings.
WHAT IS THE BEST CHOICE FOR THE CONSUMER?
Invest in a large, well diversified fund with low charge. Less than 1% per annum. This is available from NTUC Income. Many people have benefited for it. Join them.
Dear Mr Tan,
ReplyDeleteOn behalf of many people I know who has invested through financial advisers, I wish to say that for them it's either a "get lower investment returns" or "almost nil return with savings accounts" scenario.
This group of people usually has the common traits of:
- limited knowledge of what the market has to offer; and
- has "no time" to seek out for good/ suitable investment products.
Hence, with the convenience of financial advisors coming to their doorstep, they decided to accept this lower return tradeoff.
Therefore, I believe it's very important to bring awareness to others about the hidden costs/ risks involved in many products for which many unruly financial advisors attempt to withhold.
Personally, I am rather apprenhensive about investing with Singapore financial institutions after having heard many bad experiences. I still have most of my investments in Australia (a country where I have spent my last 9 years in) where the online savings account interest rate is approximately 6%. I am aware of the potential foreign exchange risks involved but I guess I will have to slowly assess Singapore's investment environment before I make a move.
Mr Tan, thanks for all the financial information you have provided in your bloh. It has been a very good read for me and very thought provoking, especially in helping me to further understand Singapore's finance market.
Magdeline Teo