Pure greed or plain ignorance?
2 prominent cases came to a close recently. In Singapore, MAS, after much investigation, banned several financial institutions from selling structure products. And in the US, Bernard Madoff was sentenced to 150 years jail for fraud involving a ponzi scheme.
The actions taken may be stiff but it did nothing to relief the pain of the thousands of investors who lost their savings in the 2 cases.
Yet for others who were not affected, are they wiser from the experience of the unfortunate ones? Each day, investors continued to be offered opportunities of better returns. It can be the property agent who offers you the chance to buy a property to ‘flip’, the friend who offers you the hot tip about a certain stock or the guru who has a trading formula to share.
How many investors who were sold Lehman-linked investments actually know what they invested in or were they simply sold to the idea of ‘better than bank deposits’ returns?
I can never emphasize enough on the importance of understanding what you are putting your money in. No one can force you to part with your money if you do not want to. Do not be taken in by easy returns or ignore the fact that with higher returns come higher risk. Do your research before writing your cheque!
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By Ee Min, July 12, 2009 @ 7:39 pm
fully agree.. which is sad cuz if one look ard, product advisers are everywhere, yet financial advisers are far and few.
counterparty risk, issuer default, swaps (terms that became more common in media after the Lehman ‘bomb’).. it’s not that difficult to understand but many who bgt probably din read the prospectus but were more in tune with the nominal return rates splashed out in large fonts.