Paying School Fees

Last post narrated a story that i went through where i wasn't the lead character. It happened after i gained some form of knowledge in finance to be able to help in the way i did.

Today's post will cover the one story that started it all. The one that made me realize there are wolves out there. And if you're not the predator, you'll become the prey.

It all started when i entered the workforce. I was finally earning my own keep.  Like others, i'm no longer bounded by the allowances I receive, not bounded by the little income I can get teaching tuition or working part-time after school. A sense of freedom enveloped me which i later realized was the ability to meet my own needs.

I was now in a situation which was sustainable. My expenses were lower than my income; exactly the meaning of living within my means. And that just means i could save that difference of income minus expense.

Now with this spare cash, you could do countless other things. The one thing i knew back then was that the banks were giving me miserable interest. I had to do more in order to make better use of my accumulating savings. I had the misconception that because i was not a finance person, investing was beyond me and i best outsource this scary and complex task to some one else.

In came, this very kind FA by the name of Z.

Z was a young skinny lad, probably not much older than i was. The only clue i had about him was that he was already working during my days in National Service as that was when he first contacted me. Till today, i believe an acquaintance of mine left my contact with him. Z knew my profile and didn't bug me too much about buying a product with him for a good 3 or so years when i was in school. However, he continued to stay in touch, slowly leaving an impression in me. 

When Z contacted me this time round, my profile has changed. I was now well-fed as a prey rather than a malnourished young cub which won't satisfy much of his satiety. Z was smart and patient to have stalked this young prey till now. Honestly, young FAs out there could take a leaf out of this book. I thought he was sincere enough to have followed me for so many years so i agreed to a meet-up.

With an income, some savings, complete ignorance in finance, i make the perfect candidate to sell some toxic products. "I want to invest some of my spare cash because the interest rates are very low." This was what i told Z on our first meeting. Oh how foolish was I. I thought i was so smart to know the little bit about low interest rates. Z must have peed a little in his pants at this point. He must have been a very good actor as well because I don't recall him being terribly excited at that point. I did get fantastic efficiency in processing my paperwork and that coffee was on him.

And so, i started paying for an ILP and perhaps also, a bit of Z's car loan. Looking back, i should have bought from a sweet, young thing in tight skirt instead of Z. At least i could have a more pleasant meeting and a good feast for the eyes. But i digress.

After several months, i logged in to the platform the insurer provided. I was shocked to see that 90% of my savings went to costs and only 10% was actually buying some funds. I took out the policy documents and indeed, this was already presented to me. I guess their sales tactic worked as it successfully managed to divert my attention to the good stuff and forgot about the bad ones. Obviously now, the coffees we had during that fateful meeting was borne by me.

I quickly terminated the policy at a loss and got back a mere fraction of what i spent. It could have been much worse like the folks who have paid for years. With a street-trained mahjong background, i took this as necessary school fees. I then embarked on educating myself on finance and has never looked back ever since. I don't fully blame Z for selling me that product because i asked for it. But he could have done a better job in explaining to me the full intricacies of the product. It was clearly not suitable for me. 

Now that i have a few years managing my own finances under my belt, still novice in the world, i can proudly say that investing is not THAT scary or complex a creature. With a good dose of discipline and self-control, it can be made simple.

Onwards, the posts will become a bit more random covering values, concepts and examples as and when i find good lesson material in my day-to-day life.

Leopard Origins

Let me narrate a story.

One day, my aunt came to me, asking for help with her insurance policies. I thought it was strange that she knew i had some proficiency in this. So I probed a little and found out she was facing problems with her finances which led to the deterioration of her health. I agreed to help her out, careful not to over promise for i had neither experience nor qualifications.

So i went to my Aunt's house one morning. It surprised me to see another lady there. Somebody closer to my age than my aunt. This lady was well dressed and professional in her short white dress. She introduced herself as S who was an agent who managed some of my Aunt's policies. While my Aunt was gathering her documents, i spoke to S trying hard not to be smitten by her powdered and beautified face. You can't blame me for they were good in the art of making-up - both cosmetics and stories.

S handled the situation first and reviewed many of the documents that my Aunt brought out. She sounded perplexed and upset at the situation my Aunt found herself in. Way too many policies, way too many unnecessary insurance with premiums way too high for her income. Now, this sort of situation came as no surprise. I've read and even witnessed many such cases but to hit so close to home is another matter altogether. Not all products were sold to my Aunt from S and she only recently took over my Aunt as a client.

I was wary about S because she's an agent and she's pretty. As S was going through all the products, it was clear she was not the one responsible for the most toxic products sold to my Aunt. Her products while not ideal was actually providing some decent coverage. I can't speak the same for the rest. S's heart is as good as she looks.

Below i list the products that my Aunt had.

- A hospitalization plan
- 15year endowment plan (started in 2014)
- Single premium ILP
- Limited Whole Life (started before 2012)
- 5+5 Endowment plan (started in 2012)
- 5+5 Endowment plan (started in 2013)
- Annuity Plan with 8 years premium, to be paid out from Age 70

All the above for my Aunt who turned 55 in 2012 with take home income less than that of a diploma graduate. Her health is not that good and she has no dependents.

At this point, S and i were frantically trying to locate the receipts and passbook details for the accounts to gather the full picture. Observant readers will note that 55 is the age of the withdrawal of CPF funds. It was clearly the case where extra money was suddenly available and you became the fattest prey to these unscrupulous wolves. My Aunt merely wanted to place money into rolling Fixed Deposits.

As we went through all the fact-finding, it was clear what happened to the monies and we managed to piece together the timeline in which all of the above happened. S finally took her leave after doing the paperwork her client requested for. I stayed on and planned for my Aunt her best course of action.

The 2 5+5 Endowment plans were sold to my Aunt by a bank sales staff named I. Initially, i was angry at I. She was probably only focused on hitting her own KPI when selling products to my Aunt. These two plans had annual premiums 10 times the amount my Aunt brings back home monthly. Just what is left for my Aunt's day to day sustenance is beyond my comprehension. She even had to withdraw more money from her CPF to fork out for these premiums. To make matters worse, my Aunt downgraded her hospitalization plan so that her overall cost is lower. Thinking in the shoes of my Aunt, she probably felt silly for making mistakes like this. Me getting angry will only make her feel worse.

Still, I won't wish I well though. I's LinkedIn profile has her looking worse than S and most probably her heart too. It's no wonder some people will never look good no matter what they do.

I thought of approaching the bank for a resolution. If that does not work, to go on to FIDREC. After more thoughts, this seems to me to be at the cost of the victim's well-being. Long story short, justice cannot always be served and if it does, it comes with a cost that cannot be compensated by dollars and cents. I eventually took over most of the outstanding premiums so that my Aunt can focus on getting well.

It has been 6 months since that fateful day i helped review the policies. We did eventually raise an issue with the bank but we didn't get the outcome we wanted. My Aunt seems to prefer not to push through with her case. The only consolation for her now is that she knows she isn't alone in this.

All i can do now is to hope she doesn't need her money until the plans mature.

Birth of a Blog

Hello visitors.

This post is written to commemorate the birth of this blog.

After much thought over 2016, i have decided to embark on a mini project on writing to educate on financial literacy for non-financial readers.

While i may not have the qualifications in Finance, what i bring is a keen interest to translate difficult financial concepts into simpler ideas for the lay-person on the streets to understand about growing wealth.

The objective is simple: Education.

And the values that i will stick to is Simple, Relatable and Short.

This also serves as a place for me to revisit the theories that i might have forgotten along my own journey.

In the days, to come i will publish more about myself and the one incident that finally pushed me to start this blog.

Stay tuned.