A Chinese educated investor met me today. She was led to invest in two financial products by a bank relationship manager on the promise that it was capital guaranteed and had the potential of a good return. After three years, she lost 40% on the investment and found that it was not capital guaranteed. The investor said that she was not aware about the product, as it was in English.
I found out that she had invested in two real estate unit trusts. I was surprised that these two investments lost 40% of the value during the past three years, when the global real estate and stock markets had recovered from the downturn.
I suspect that the investment banks that created the two real estate funds could have put in bad assets at inflated values - which accounted for the large loss. This is an example of the risks of investing in funds that could be created by dishonorable financial institutions who wanted to get rid of their bad assets to unwary investors.
The bank who mis-sold these financial products offered to cover half of the loss "out of goodwill". The investor asked for my views on whether she should accept this offer. I advised her to accept the offer as the decision from FIDREC is likely to be less favorable. She does not have any evidence of the misrepresentation of the product.
Lesson: it is best to avoid funds where the creators of the funds may have some bad assets to offload to investors. These institutions are quite willing to act dishonorably.
- ► 2013 (302)
- ► 2012 (1270)
02/27 - 03/06
- Lehman Brothers Equity-linked Notes
- Real estate funds lost value
- Eggs and nuitrition
- SGEP Editorial
- Looking for a job?
- PAP enters the digital warfare
- Good customer service - online team
- 15 year old speak at SDP rally
- SGEP - mention in international blog
- FIDREC should build up trust
- SCMP: Bank officer charged on mini-bonds
- General election - survey results
- Government to support parenthood
- Shorter working hours - solve unemployment problem...
- Giving back budget surplus to citizens
- Promise of a better future
- High medical cost
- Rejected insurance claims
- This election, your life, your future
- Direct Asia - cheaper premium rate
- Law firm advising a land banking company
- Land banking
- Corruption of middle level leaders
- Taxi service in Singapore
- Astronomical fees
- Traffic woes of Beijing
- General Election Portal
- Health Subsidy for Singapore citizens
- Fee guidelines - the Brunei Times
- This is home, truly
- Dr. Susan Lim's bills
- Financial Planning Talk and Review of Insurance
- Wordle - Get Value from your Life Insurance
- Pressure seal letters
- Talking point - no point talking
- Insuring medical expenses for the elderly
- Financial products that rip-off consumers
- Read SGEP daily
- Allow professional bodies to set fee guidelines
- Paying for old age
- Warren Buffett and home ownership
- Family Life Practice (1m)
- Who is better off?
- Local professors in Singapore
- Vote in the general election
- High medical fees
- At Grave Risk
- ▼ 02/27 - 03/06 (47)
- ► 2010 (2369)
- ► 2009 (1655)
- ► 2008 (2105)
- ► 2007 (1803)
- ► 2006 (696)
- ► 2005 (159)