Did you read the story about EPF contributors losing their shirt in unit trush schemes? It says "...80% of EPF contributors who invested their savings in unit trusts posted losses totalling RM600 million". Wow!
What happened? How can so called professionals with degrees and certifications lose? The answer is they are just human. Human makes mistakes. So are they. And not all of them are good. Maybe 5% of the funds are good but the rest are rubbish that only knows how to fatten their own purse.
The first question to ask is: Is it worth the risk paying them to earn an extra few percent return above EPF return?
In my honest opinion, it depends on how good are they. If they can return 20% yearly, I would say it is worth the risk. If the return is less than 10%, then I think it is safer putting your money in EPF than letting them handling it. If they can give you that return in a good market, imagine what will they give you in a bad one.
The next question is how do you know they are good? Well look for information about their pass performance. They ask about who are the fund managers. Always keep track of this important person. This is not easy as you will only know this when you get your quarterly interim report.
The next thing to do is never trust the person trying to sell you any trust fund products. They are just sales person whose income depends on sales. Maybe only a few are honest. It is better deal with a person that is independent from any funds as his opinion will not be bias.
Investing is not easy if you are the lazy type that just wants to put your money in and forget about it for the rest of the year. You need to be active and pay attention to your portfolio. In other words, you still need to do your home work.
3 comments:
Swifz,
Good write!
There is one other issue. Timing of purchase.
Yes, the agents will come up with stuff like doolar-cost-averaging stuff to average your purchase price.
However, let's think about it. When they started issuing out new funds ONLY when the market is hot, what is the likely outcome?
Well, these fund managers has got to go out into the market and buy and HOLD stocks during a hot market.
Ah, see where the problem is? They will end-up buying at inflated price.
Yes, the dollar-cost-average can be used to average the cost for the unit trust holder but this is exactly the whole issue. The unit trust holder has started playing a losing game. Buying more to averge down their cost.
That's one of my opinion why they fail.
ps. I like your post a lot, can I re-post it at sahamas to get a discussion going?
cheers!
Okalah moola.
Actually, I'm one of the sufferers in unit trust scheme. Bought it during the bull of 1992. That time I don't know anything about shares or how to choose a good unit trust scheme. :p
Investors should beware of unethical "consultants". Most of them are chasing your money , esp if they are pretty looking ladies.
They are just pretenders who go extra mile as if they have fallen in love with you.
I have been receiving frequent calls from these so called "consultants" , almost weekly a new and unknown "consultant " will call . It is difficult to shoo them off. They are so persistent . Being human when money is their motive , surely they will be very persistent. I regard them as just another ordinary "salesgirl" . Despite having honours degrees in Mktg / Mgmt / Engineering , these "consultants" prefer to work in the unit trust.
Malaysians have lost RM 600 million thro the good deeds of these so called " consultants " . But FMUTM statement says that the average return is "good". But why is it that the EPF Board or rather the government does not put a stop to investing EPF in UT ?
Should the government put a stop to this kinda investment , many of these "consultants" will die standing - loss of income/job . The government only said that "please invest wisely" but not many of the epf contributors are "ut savvy". What more when you are being ill advised by these "mercenaries" . A man's loss is another man's gain ... this is my two cents worth of thought.
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