The ‘quick fix’ society is a reflection of our instant world. No wonder a beach vacation is a must, but even then, these days, we do not really get away, because we choose a resort that beams us in to the Wi-Fi system that keeps us wired to our ultra-egos eternally.
It is like investing your money- there is a constant bombardment, a million sources, and an endless stream on what’s best to buy yesterday, today and tomorrow. Little wonder there is widespread confusion, suspicion, and resistance to placing money with one of hundreds of choices. At the end of the day, we all crave for that safe ‘quick fix’ and a guaranteed instant fat profit. Unfortunately there is no simple yellow brick road to the money castle.
Here is an attempt to de-mystify the lucrative potential of investing hard-earned money by unravelling the jargon, explaining the risks of specific types of investments, and laying down a route map which will allow individuals plenty of ammunition with which to make there own calculated decisions based on solid foundations of information and knowledge.
However well informed one is, there is always that lack of certainty, always tinted with a touch of the unknown. When it comes to making any investment decision, it is all down to one’s attitude to risk in the end.
Jargon and the Small Print
JOKER or BROKER
The best-intentioned broker will understand the number of pieces in any investment jigsaw, and will be able to paint a fair picture of the out line.
However, it is unexpected that the broker will know the underlying mechanisms of how the investment actually ticks.
Therefore the ‘go-button’ to invest all comes down to a cocktail of personality, explanation and presentation in the end.
The broker themselves relies on facts as presented by the investment house, and is given confidence by the fact that strict regulations are applied to in the country where the investment itself is registered. This means that the investment has been put through some rigorous hoops to ensure it conforms to strict financial standards. This will make sure that it is not a pack of cards in the long run, but does not in any way reflect the way that that investment might perform.
JURISDICTION –SOLID or FLAKEY
Just because an investment scheme is registered in Switzerland, (that bastion of all that is good and solid in the investment world), it does not mean all is hunky-dory, although there is a 99% chance it will be.
The Philippines itself is not a first class internationally registered investment jurisdiction. Most investment structures are backed by responsible groups and work well for investors, but beware, for many loop holes exist, and may be exploited if the investment corporation has bad intentions.
This does not mean ‘do not invest in the Philippines’ but rather ‘know your client’, before taking any opportunity alongside the risk.
Once invested, make a point of checking regularly to ensure everything is going as planned. There is no shame in cashing in on an investment if it does not shape up the way it was intended, or is not giving you the returns that you are seeking.
Bermuda, the Cayman islands, The Channel islands and the Isle of Man are all tip-top jurisdictions where many international investment offerings are registered.
Nigeria and Cote d’Ivoire and Haiti do not quite pass the same standards as investment jurisdictions!
BASKETS – Big and Small
We have all heard the term “don’t put all your eggs in one basket”.
In the investment world this cash-phrase particularly applies.
The more money you have to invest, the more baskets you can share.
Unfortunately it is the new investor with a small amount who has to take the bigger risk by choosing that single basket because there is not enough to share around.
One can only hope that initial checks before choice are good enough so that the contents of that single basket does not end up smelling like a freshly opened ‘Balut’!
INVESTMENTS – Checks & Choices Scams
- Internet investment offerings – these are crude and a hideous development for the gullible.
- The ‘Boiler Room’ – a smooth talking telephone-salesman who persuades people to send their money by telegraphic transfer after only a telephone chat. These ‘boiler-rooms’ exist here and around the region, and must get results since they still flourish.
- High Interest Guarantees (sophisticated)– these are a kind of inverted pyramid, where monies pour in, fuelling a frenzy in the early years with high interest payments. But eventually, the tap is turned off and the perpetrators fly away with the capital. They require about $30,000,000 per year to stoke the fire.
Direct Equity purchase
- Stockbrokers-local brokers
- International brokerage houses these days accessed through the Internet
- Banks with their own brokerage departments or Private Banking operations
Fund Investment purchase
- Fund Brokerages – brokers who research international fund choices
- Fund Houses – Morgan Stanley, Jardine Fleming etc etc
(a) Banks and Brokers here in the Philippines are heavily regulated and offer local resident clients a very restricted and limited range of funds.
(b) There are literally thousands of choices in the international arena.
NB Funds internationally cover worldwide equity markets but also, and most interestingly, a whole host of choices which are not related to equities – like money markets, hedge funds and commodity funds and other specialist funds.