How will your investments deplete if he is just selling and buying repeatedly? For every financial product, an upfront sales fee of 3 to 5% is paid. This percentage is higher than what is paid out to you. In other words, you are exchanging future money for a much smaller sum of present money! In the long term, your retirement funds are eroded from the many rounds of sale charge payments. The only party to benefit from this arrangement is the adviser.
How prevalent is this problem? Nobody knows. But my observation is these practises still exist. Some financial advisers also work together with loan sharks to target hard-up Singaporeans who are in need for quick cash.
Fraudulent advisers try to reach out to unknowing victims through various media instruments like flyers, newspapers, online advertisements and word of mouth.
This is not a new issue. However, we are seeing a renewal of such a trend. Singaporeans that come across such advertisements should stand up against such investment frauds by informing the Monetary Auhtority of Singapore (MAS) or highlight the cases to a Certified Fraud Examiner [CFE].
If you’re looking to make money out of your investments, I suggest going back to investment basics. Understand that there are no shortcuts to making money from the markets. Conduct rigorous financial planning and understand your risk profile. Depending on your willingness and capacity to invest, a professional adviser will be able to lead you to a few options. As a general rule, practise diversification of funds and have adequate exposure to equity markets.
By Alex Lew / http://seekingreturns.com/