I’m creating this blog so that it will hopefully serve others well in their investment journey, and will quickly get to the crux of it all without too much messing around.
I myself have been on a long 6 year journey now and have learned a lot in that amount of time and wish to share it with others in order to help the average Joe or Jane out.
Why am I writing this?
To hopefully save someone from getting talked into purchasing a long-term investment product that is going to do you no favours over the long run, which coincidently is the same one that will serve your advisor very well!
Specifically I am calling out all investment linked products from companies such Zurich International, Friends Provident, and Generali Vision to name a few.
These products are targeted at naive expats who have recently arrived in a new country, are making decent money and don’t know what to do with it.
Enter the sales shark.
Mysteriously you may receive a call or email, asking you to catch up over a coffee to discuss your retirement plans. To this day I don’t know how they got my number but none the less they did. (If you’re in Singapore, take note to register yourself on the Do Not Call list).
So my story is as follows, I was 30 years old, had just moved to Singapore from Australia, had spent the last 10 years working for a multinational IT vendor, was one of the best in my field, but had spent all of my life to date focusing on my career and knew next to nothing about finance. I was always a good saver though, so was not in any debt, and owned nothing else to my name (no house, and no other investments except for Superannuation).
I had also been burned a few times to a minor degrees due to some bad forex trade advice. (Whatever you do please don’t try and make money off forex).
Warning: Don’t have too much faith in your banker. They are on a commission just like anyone else and they have targets to make and will sell whatever product that helps them make their goals. Not what’s actually in your best interest.
So there are two traps to avoid:
- Private banking, CitiGold, DBS Treasures, etc. Once you reach a minimum sum in your bank account you’ll get ‘upgraded’ and made to feel like a real VIP. This is of course designed in order to soften you up and listen to their “experts”, and ultimately get you to spend some money on some Unit Trusts and the like. They will show you the past results of how well it has done but of course they are only showing you the ones that did actually have a good past result (and not the hundreds of others that did not). By the time you will have bought it, it’s probably already hit its peak. I bought some of these, but fortunately escaped relatively unscathed. Not a big deal in the long run, and a good learning experience to wise up.
There are some other benefits in these programs, but I’d suggest you’d be much better off holding less cash and investing it yourself.
- The sales people selling the aforementioned investment linked products from Zurich International, Friends Provident, and Generali Vision to name a few. These are the ones with mega commissions, high on-going costs and long-term contracts with heavy penalties if you break. Avoid at all costs.
Most of these “fee-free advisors” will act like they are doing you a favour. In reality they are mainly taking advantage of your lack of knowledge in this area.
There are actual real advisors out there that will charge you for advice. These guys are okay as long as their on-going costs are 1% or less, and they use passive (indexed) portfolios for clients. I will advocate that you can do it yourself though for on-going costs of around 0.25% or less.
One thing I will admit though, even buying some of these high-fee and under-performing products is usually better than doing nothing at all and leaving your money in cash. They may even end up meeting their stated goals, BUT, you could do so much better, with much more flexibility and control.
This is what I want you to learn and to take control of your own financial future, and not let some salesman take away your hard earned cash.
It is not difficult and my goal is to show you how you can do this on your own or with your partner.
In my next entry I will discuss the difference between Active and Passive investment styles.
In the meantime, please checkout Andrew Hallam’s site – it was his book “The Millionaire Teacher” that finally woke me up. I cannot recommend it strongly enough and consider it mandatory reading for any first time investor.
I will be taking you through my own personal experience of following Andrew’s advice and John C. Bogle and all the other passive investors after him, but in hopefully a little more detail of how to actually get it done.