Tan Kin Lian's Blog: No personal investment in credit linked securities

Thursday, October 09, 2008

No personal investment in credit linked securities

I do not have any personal investments in the credit linked securities, such as the mini-bonds, high notes, pinnacle notes and jubilee notes.

I have warned investors for the past year that these products have risks that are not easily measurable, and that the higher yield does not justify the uncertain risk.

My wife was sold the pinnacle notes. Like many other investors, she was told that it offer a higher interest rate and the risk was small. I told her to go back to the finance company and get her money back. She was able to get the full refund.

Previously, my wife and daughter invested in capital guaranteed or capital protected products. They waited patiently for the product to mature after 5 years and received a miserable total return of only 2%. These products were structured to make profit for the financial institutions and were unfair to retail investors.

I am very sad that the financial institutions were allowed to offer these "unfair" structured products to retail investors during the past ten years. They make big profits for the financial institutions but leave the retail investors with a miserable return, or as in the current case, with the loss of most of their hard earned savings.

Nobody looked after the interest of the retail investors - not the regulator nor the consumer association.

6 comments:

ym said...: mr Tan, have a listen to this interview in bloomberg :

faber essentially said that the quality of a financial product is inversely proportional to the paper weight of the prospectus... and that bartenders are smarter than central bankers..

central bankers and bankers are responsible for the crap we are in...

http://www.bloomberg.com/avp/avp.htm?N=av&T=Faber%20Says%20Global%20Rate%20Cuts%20May%20Not%20Stem%20Equities%20Rout&clipSRC=mms://media2.bloomberg.com/cache/vWAAmxBK4.aA.asf; October 09, 2008 3:11 PM
Anonymous said...: Many thnaks Mr. Tan.

1. Plase ask the media reporter to interview those non-Engish speaking
victims who bought Mini-bons or other strutured products.

2. I notice in past 2 weeks, the Chinese media is very passive in reporting Mini-bond ( or other strucuted products ) events.; October 09, 2008 3:26 PM
Anonymous said...: Yes, I agree with Mr Tan. I also it is wrong that some financial institutions allow their agents to push sales at public places such as bus terminal and MRT stations. Many people have been taken in.; October 09, 2008 4:14 PM
Anonymous said...: NTUC roadshows all over the mrt and malls.You look at the big posters they put up.
And they scream "$5000 Guaranteed".
This is misleading. You need to pay $1000 a month and $12,000 a year to get $5000 after the 2nd year.. How much is $5000 over $12000. Hardly 50% refund, it is YOUR MONEY refunded to you after taking so much from you. This is revosave. The poster is misrepresenting and misleading.; October 09, 2008 7:39 PM
Richard Goh said...: Mr. Tan,

Many people have fallen prey to capital protected, structured products. They were given a 5% payment upfront based on 1% per year and this is pretty tempting as a 5% lump sum. They were promised numerous opportunities for higher payment and the conditions for payment were highlighted to influence the sale.

These people have to wait for 5 years or more to get back their principle upon maturity and no other payment because the conditions were never fulfilled.

In the end only the banks emerged as the sole gainer.

If such structured products are not structured with exploitation, what is?

It is sad that MAS has allowed the banks to sell these products for many years already.

As a financial regulatory authority, MAS should play its role more professionally, and with a view to protect the interest of the investing public.; October 09, 2008 8:19 PM
Falcon said...: Yes, it is indeed sad that the regulators are not active in preventing the local investors from being slaughtered. You had stood up against the new NTUC Income's philosophies too but had to back down when the big guns of NTUC intervened. It is indeed sad that the very ministers and MPs who are elected are not as enthusiastic in looking after Singaporeans' interests but chose to side with the unfair party. What can Singaporeans like myself do to change this?; October 10, 2008 12:08 AM