How much the Managers work like Tota Ram is another good and true story here. Though it relates to many of my close friends and I only hope they will only read and laugh at themselves. But then there were CEOs and Top Managers , who are supposed to be evaluating risk at each stage of biz, failed to see the nuisance in the scheme.
Way back in the year 2004, a smart Manager from an Internationally renowned bank came to look for investors from the expat community of Indian Indonesians.
Factory to factory and door to door he traveled explaining, how the Zurich Fund ( One of their funds ) would make them a millionaire after 10 years . All one had to do was to invest religiously on monthly basis a certain amount. And the catch was that , if the fund investment is stopped before 10 years, then there is a huge exit load. Working out to earnings even lower then the one invested. So, once you are in, then there are no exit doors in the scheme. And of-course, in the fine print is that everything is linked to the international equity market, where Zurich will invest.
The finance knowledge of most technical guys is usually zero, but they all believe that they they understand fully the investment products. So, many of them got trapped in the presentation and enrolled for the scheme, hoping that in the year 2014, they will pull out a million dollar.
The same manager also came to me and made exactly the same presentation luring me into the million dollar bubble. But of-course for me, I will put hundred questions, before I invest even a single dollar. I clearly saw the trap and excused myself . Lucky me. Not that I have always made high returns on all my investments, but at-least I managed to not lose money ,even in the 2008 financial crisis. Thanks to my MBA in finance.
Now, what happened with the fund. In the year 2008 of financial crisis, the value of the fund became so low that whatever was invested was not even worth one third. A few years later , which is now, the fund is somewhat better, but largely many not be able to recoup the investment. One and everyone who invested into the fund lost out heavily. Against million dollar, now they look for getting the principal back as already good enough.
The manager who came to sell the product , quietly left the bank, the bank itself got taken over by another bank and the legacy of defaults continued.
Because, so many of us are trained, shaped, educated and molded in the industry to not question anything , nor learn about the system before getting into it. The original Parrot shows up at most decisions in life, whether it is for self or for the company. More one sees this error routinely in their company decision making. Though there the cost is to the share holders.
The Parrot still sits in the cage, still sings the broken record of , "I will be a millionaire"
Way back in the year 2004, a smart Manager from an Internationally renowned bank came to look for investors from the expat community of Indian Indonesians.
Factory to factory and door to door he traveled explaining, how the Zurich Fund ( One of their funds ) would make them a millionaire after 10 years . All one had to do was to invest religiously on monthly basis a certain amount. And the catch was that , if the fund investment is stopped before 10 years, then there is a huge exit load. Working out to earnings even lower then the one invested. So, once you are in, then there are no exit doors in the scheme. And of-course, in the fine print is that everything is linked to the international equity market, where Zurich will invest.
The finance knowledge of most technical guys is usually zero, but they all believe that they they understand fully the investment products. So, many of them got trapped in the presentation and enrolled for the scheme, hoping that in the year 2014, they will pull out a million dollar.
The same manager also came to me and made exactly the same presentation luring me into the million dollar bubble. But of-course for me, I will put hundred questions, before I invest even a single dollar. I clearly saw the trap and excused myself . Lucky me. Not that I have always made high returns on all my investments, but at-least I managed to not lose money ,even in the 2008 financial crisis. Thanks to my MBA in finance.
Now, what happened with the fund. In the year 2008 of financial crisis, the value of the fund became so low that whatever was invested was not even worth one third. A few years later , which is now, the fund is somewhat better, but largely many not be able to recoup the investment. One and everyone who invested into the fund lost out heavily. Against million dollar, now they look for getting the principal back as already good enough.
The manager who came to sell the product , quietly left the bank, the bank itself got taken over by another bank and the legacy of defaults continued.
Because, so many of us are trained, shaped, educated and molded in the industry to not question anything , nor learn about the system before getting into it. The original Parrot shows up at most decisions in life, whether it is for self or for the company. More one sees this error routinely in their company decision making. Though there the cost is to the share holders.
The Parrot still sits in the cage, still sings the broken record of , "I will be a millionaire"
GOOD u save urself nicely and warns other also
ReplyDelete