We often think of investment as something easy. Just put in some of our hard earned money and watch it grow into a huge pile of money at the end of a certain period. Sometimes the period could be every month, every quarter and usually every year. Yesterday someone representing a bank called me to offer me a savings rate of up to 7 percent. WOW, I said, ‘thank you’ and ended the call. Banks offering you 7 percent BUT their home loans are only at 4.5 percent. Means they are paying the depositors 7 percent but charging their borrowers 4.5 percent?
Not sure which bank has turned into a charitable organisation which is about to fail soon. By the way, all charitable organisations aim at not-for-profit which means that they MUST have surplusses to cover their costs… This is why when we donate RM100 to some charitable organisations, not 100% of the donation will go towards their causes. Coming back to ‘people say price sure up, so I buy.’ Here are 4 reasons why this is usually not applicable.
#1 – Who is this ‘people’? If there are investments which are sure go up, why are these people still offering it to more people? Especially if the promised returns are very much higher than what’s available in the market. Why they did not take the whole thing by themselves? Let me be serious yeah. If a company has found a formula which will definitely earn them lots of money, they are NOT going to share it with investors. They may take loans instead and earn all the profits themselves…
#2 – Greedy people easily fooled. Working harder seems much tougher than just simply believing that something will yield easy and fast profits. Well, it has proven time and again that when it’s too good to be true, it usually is. Here are earlier articles: Cheating us easily, when we are greedy Working hard, investing smart will stay true. Issue is, it will take time and we could not suddenly have money to buy that designer’s handbag. Sigh…
#3 – Continuous returns not possible – Briefly, assuming someone could offer us a 5 percent return per month. This someone must have a business which could generate a return which is more than 5 percent returns per month. It’s definitely not a plantation company. If it’s selling goreng pisang, then this goreng pisang stall must keep selling ever more pisang every month. From one stall becomes two stalls and soon, the whole road must have rows and rows of goreng pisang stalls… Please ask, where is the 5% return per month comes from. What’s the business behind this ‘sure profit’ returns every month. The answer will reveal the truth.
#4 – If you still need the 4th reason… SCAMS happen everyday, perhaps every minute someone is being fooled in a coffee shop or cafe somewhere. It’s hard to say I will not be fooled one of these days in the future. However, I continue to hold firm to the belief that investment will always take time. Only gambling will be immediate. There’s a saying in Cantonese too but it’s a bit rough, so please ask your friends yeah. It starts like this, ‘If people ask you die….” Happy understanding and investing our hard earned money smartly.
<Featured Image is courtesy of Stock Photos from TeodorLazarev>
Article written and edited by Charles. News article summarised by Dina Batrisyia.
written on 4 April 2019
Next suggested article: Plain unlucky or simply no planning?