If you ask the salesgirl if the shoes look good on you, what would she say?
If you ask the insurance agent if you are sufficiently covered, what would he say?
If you ask the property agent is it better to invest in stocks or property, what would he say?
If you ask the broker if it is a good time to buy stocks now, what would he say?
If you ask the barber if you need a haircut, what would he say?
...
DON'T ASK STUPID QUESTIONS LAH!
A property agent agent job is to sell house, not to take care of your finances.
An insurance agent job is to sell insurance & earn commission, not to take care of your finances.
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In the first post of this series, I'm going to debunk why you should never grow your money with insurance companies, banks, managed funds, etc...
It's actually VERY SIMPLE.
Just ask yourself: Why are they wasting their time to help you manage your money? You think really got people so free? Why do you think there's always random strangers at the MRT stations offering to help you "earn more money"?
It doesn't take a genius to figure out - because they get a cut in the process. Commissions, management fees, you named it. If they don't earn anything, you think people got so much free time to waste on a stranger?
Always remember: Their purpose is to earn from you.
This immediately puts their interest and your interest in conflict.
Supposed there are 2 equal investment products, would they recommend you the one that cost less or more fee? If they take more percentage in fee, that means less returns for you. So are they working in your interest, or their interest?
It's nothing personal - it's just business.
It's just how the world of capitalism works.
Have you ever wonder why no insurance agents/financial consultant would ever recommend you to buy Singapore Saving Bonds (risk free 2%), or to buy term insurance (they get almost no commission), or putting your money in CPF?
Imagine how dumb that is.
It's like the meat-seller telling you "Don't eat meat already. You are overweight."
It's like housing agent telling you "Prices are high now you should wait."
It's like the shop uncle telling you "This item if cheaper if you get it from next door."
See the point?
I'm not saying what they recommend doesn't make sense. I'm saying 99.99% of the time (unless you have a saint for a financial consultant), what they recommend isn't optimal. Agents got to eat, you know?
It is inevitable that they will skew their recommendations towards higher commissioned products; Products that have much better alternatives. The same products that you can purchase elsewhere.
Suppose you want to buy Bread + Peanut Butter. You can:
1. Head to your local mart and buy them individually for $2 and $3.
2. Have your agent packed it in a hamper as 1 item, and sell it to you for $10.
This is investment-linked policies for you.
This is bank structured deposits for you.
This is managed funds for you.
They packaged everyday, simple financial products and sell you at a steep premium.
You still want to buy from them?
Up to you lor.
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To add on, these people aren't necessary more savvy than you in the first place.
Every now and then you see news of agents themselves getting scammed.
What these agents know are how to sell to you, not how to make good investments.
Those agents (sometimes fresh graduates) often know nothing more about investments than you.
So two points:
1. Their financial interests are in conflict with yours
2. They are not much better than you in investments in the first place
Don't believe? You will soon as we get further in this series.
It is like paying an ignorant person a commission to help you "grow" your money. You lose in 2 ways - You make lesser than you would have, and they get to take a cut of your capital with it.
So why are there still so many people who let people managed their money?
Mostly because they don't want to take responsibility for it. They are scare of losing when they make their own investments. They prefer someone else losing it for them, and thus having someone to blame for it.
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In Summary:
1. No one care more about your finances except yourself.
2. You lose in multiple ways when you get someone to manage your money.
3. Financial ignorance will cost you much more over your lifetime than a few years of salary will.
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