Mr Tan Kin Lian shared on his blog about victims who have approached him for help with regards to being cheated by con artist.
The victims are afraid of telling their loved ones as money is involved and suffer in silence as their spouse may not be forgiving that they have lost hard earned money.
He asked that the authorities take action on these scammers who will change their guise and companies/products but use the same method to prey on the those who are gullible.
While we think that we live in the information age and that these types of scams and con artists should not be able to survive, the fact is that some of these scammers are highly intelligent and they find different ways to appeal to your greed.
Naming the companies or them may stop the scams for a while, but the better solution is heavier punitive action on those whose product is out to cheat and those schemes that are outright scams. Education of people in financial literacy and basic common sense for financial products can help too.
Bernie Madoff operated his scam lasting decades and lost more money that most people can earn in their life time x 100. the estimated size of fraud is $64.8 billion. He was put to jail for 150 years when his scheme was exposed as the financial markets tottered on the brink of an abyss.
What are the signs that it is a fraud?
1. Promise of a high return with low risk. Anyone promising sky high returns and low risk to you and asking for your investment is likely to be a fraud. The best investor in the world may get 15-18% per annum over more than 30 years, but anyone who promise more than 10% returns is likely to be a scam artist.
2. The method is a trade secret. You can make 10% guaranteed, but if I tell you how it is made, it is either too complex for you to understand or it’s a trade secret, if I tell you, I’d have to shoot you.
3. It’s too good to be true. If it sounds wonderful, it is probably too good to be true. True investment is a roller coaster ride, there are ups and downs. So if it is guaranteed, secret and everyone is investing in it, steer clear.
4. There is no external audit or custodian of your assets. If the product is not audited, and the assets/product that you get does not have an external, independent and preferably large financial institution as a custodian, run far far away.
The best way to invest is directly in the stock market.
Buy the whole market if you can which you could actually by buying the index like the ETFs for Straits Times or S&P500 and the only thing to look for is low cost.
The logic behind the market is out there everyday when the companies are making products, doing a service and earning profits or if they don’t do well, losses.
They are audited (which sometimes, doesn’t prove anything if you look at Enron and Lehman Brothers), your assets are in custody (shares parked at CDP even though you buy with a securities firm) and you know how the company is doing through its annual reports.
Tuesday, September 03, 2013 | 0 Comments
It is like going to the supermarket and asking what to stock up on.
You end up buying things you don’t need at a higher price than if you have done some basic homework to find out what are the prices of some of the items like.
The same applies for the stock market if not more so.
It is a lot more expensive to buy something in the stock market for one.
Also, it is amazing how people can scrimp and try to save a few cents on purchase in the supermarket and haggle over prices but when it comes to the stock market, buy at high prices and then sell at a loss later.
If you are in the stock market for long enough, you will make mistakes and get lemons among those stocks that you buy. But you want to get more multi baggers (stocks that return multiple times more than your purchase price, like a 200% increase) than lemons.
So what are good buys?
A checklist/guide of sorts may be useful.
In no order, these are good companies’ characteristics to look out for to add to your portfolio if they have a lot or all of these characteristics.
- sell below their book value because of negative news
- have a long history of paying good dividends (these are stocks that you can retire with which will pay you money every year)
- have good cash flow/ cash on hand
- are price setters (ie they are monopolies and the buyers have to take their prices and still stay with them)
- have increasing sales/ decreasing costs, ie profitability
- are not on an acquisition binge and buying companies left, right and centre, as this will mean murky accounting and costing later
- are buying their own stocks back
- are different from the companies you have in your portfolio
- you can understand what their business is, better yet if you can participate and see, ie going to Suntec to see if their properties are all rented out, and whether there are crowds there before deciding to get the Suntec REIT.
- have good financial ratios (which you can quickly grasp with a Dummy’s guide or just google it) comparable or better than their competitors in the same field. Good stock websites like POEMS even calculate them for you so that you don’t have to have a degree in Accountancy or CPA to do the math.
So what are you buying and what have you bought?
Wednesday, August 28, 2013 | 0 Comments
We submitted our documents for housing loan to one of the bank on the Sunday after we bought the executive condo, Lush Acres. One of the documents, the latest payslips, were submitted on the Monday as we could only get access to it in office. However, we had submitted our earlier payslips all on Sunday.
How long did the approval process take?
To our surprise, by Thursday late afternoon, in just 4 working days later, I had a call from my banker who told me that our loan was approved.
I asked her if the fact that we had an approval in principle with two other banks prior to getting our EC played a part in the fast approval. She said that it doesn’t and that all banks have different processes which does not care if other banks have or have not granted the loans in principle or otherwise.
So how does the bank determine who to loan?
One method that banks use is the Credit Bureau of Singapore(CBS). The CBS was set up by the Association of Banks in Singapore (ABS) to manage credit risk. It collates the credit cards, the loans that you have to calculate a credit score.
The scary (or wonderful, if you are the banks) part of it is that all banks return your credit history to this central repository. So if you are one of those that are slack in repaying the credit card bill and allow it to go 1 month past due, this blemish on your record is there for at least a year.
Then you are graded from HH to AA in your credit worthiness. They also even assign you a credit default risk and how likely you are to default on your loan and credit card payments.
And all the credit card applications, loan applications are logged, so that if you have many applications, it could cause your credit score to go down.
For the banks, it gives them a safer way to decide if they want to give you the credit facility, the credit card and a big sum of money for the housing loan.
Being a nosy parker, I went to check my credit worthiness a few times before, but both times it failed at processing. For some reason, today was alright and I managed to see my credit rating was a commendable AA.
I found that they even tracked if you have made full payment for the month for the past 12 cycle. And also if you have made a balance transfer of your credit balance you owe the bank to another bank or credit line.
It is just $6 and GST, which means $6.42 to check.
So that was why my banker said that some of her clients have really a lot of credit cards, so I guess for them, it takes a while for the bank to check and come up with their home loan approval.
The total personal loans/credit facility, car loans and even minimum payment for your credit card goes to the calculation for the Total Debt Servicing Ratio (TDSR) which is pegged at 60% so this determines how much the banks can lend for the housing loan.
So the more credit cards you have, the lower the bank can lend for the housing loan especially if you are also saddled with a car loan.
If you are going to apply for a housing loan or buying a house or car, it will be a good thing to check all this on your credit score before you commit yourself.
Tuesday, August 27, 2013 | 0 Comments
reliance placed on information provided in the blog.
Shares and financial instruments illustrated in this blog can go down sharply or in certain instruments suffer total loss on the initial investments. Investors are advised to make their own judgment on the information provided and consult their own financial advisors or consultants as to the suitability of the products illustrated to their particular financial needs and objectives before acting on any information contained herein in this blog.