Be careful of bank investment packages

Discussion in 'Car Talk' started by FVel, Dec 9, 2014.

  1. FVel

    FVel Senior Member
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    So, the other day my wife's idiot friend, acting as an agent for a bank, tried to introduce her to an investment/insurance plan. My wife suspected something fishy with the numbers and wasn't sure it was a straight deal so she decided to run it by me to get my opinion. Now this is a well-known local bank and one of the largest in the country but typically with most banking investment packages these days .......they are total bullsh!t.

    Strangely enough, many people seem to fall for the same schemes day in day out. Are people really that stupid....and greedy?

    It goes something like this :-

    You have to buy into an insurance investment scheme where you deposit RM 10,000 principal on the first year whereupon they will pay you a once-off RM2,000 on the principal at the end of the year. At this point the promoter will keep trying to tell you its a real sweet deal. 2Gs once-off interest on 10Gs packed for one year....that's 20% return. Or is it ??

    The golden rule with any get rich scheme is that if it sounds too good to be true, then it almost always is..... LOL

    Trouble with this crap scheme is while you are so blinded by that '20%' shining on your face, the contract obligates you to deposit RM10,000 each year for 6 years. They will still pay you RM2,000 once-off on each of the RM10,000 but you are tied to their plan for 6 years and no interest accrues on the earlier deposits. You are limited to RM2,000 once-off interest on each RM10,000.

    In simple maths :- RM10,000 x 6 = RM60,000 total investment
    RM2,000 x 6 = RM12,000 total interest over 6 years.

    Effective Interest per year = RM 2,000 (ie. 12,000/6)

    Effective interest rate per annum = 3.33% (ie. 2,000/60,000)

    In short :- RM60,000 of your money is legally locked in with them for 6 years the moment you inked the contract even if you only deposit RM10,000 with them each year. the fact that the interest on each RM10,000 is non-accruing and the interest payment is a once off affair on each RM10,000 at end of each year means your total effective interest is only 3.33% and not 20%.

    6 years is long time to pack any money and if by chance you need to withdraw prematurely before the contract term is up, they will penalize you. At the end of the 6 years, they will also be ancillary costs within the contract terms which also means you do get back your full RM60,000 principal.

    You could have easily get the same deal at much more favourable terms by packing RM60,000 for just one year at the going FD rates which is 3.xx% .

    So what's the moral of all this ?

    Never trust the f$$king banks. Most bank investment schemes these days are misleading pieces of crap. The fact that even a large local bank have the audacity to promote garbage like this should tell you that banks do not care about their customers benefit.

    On legal terms there is nothing illegal about that contract but it is definitely misleading, morally dubious and commercially reprehensible.

    Learn to do your own investments and don't trust any freaking bank to do it for you.
     
    #1 FVel, Dec 9, 2014
    Last edited: Dec 9, 2014
  2. john_unai

    john_unai Senior Member
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    which bank la bro? d kepala harimau ar?
     
  3. gunnerzz

    gunnerzz 5 Year | Silver

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    Ya lor..
    Dun be afraid to state the name of the bank.
    i am an ex banker but i dont involve in investment and agree that most of bank product are crap.only few are acceptable.

    its not illegal as all the detail are written in the contract.
    only whether the selling process done ethically or not.
     
  4. FVel

    FVel Senior Member
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    The name of the bank is not important.

    All you need to be aware is that ALL banks, WITHOUT exception, will at one time or another, push out investment packages which are little more than piles of turd dressed up in gift wrap paper.

    And gunnerzz, since you are so keen to name names, you might as well 'out' the id of your former employer and tell us in detail what garbage they promoted to the public while you were working with them ....ex-banker indeed.
     
  5. BeCool

    BeCool Senior Member
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    I guess I know which bank u talking about.
    Actually is not related to the bank, there are two different group.
    They are under the assurance group.

    A team which highly motivated by their senior or so called leaders.
    Many people join because all of their leaders are driving fancy cars, wearing expensive watches and most popular polo shirts??

    My frens had joined and now driving new BMW and wearing rolex so that many young people will admire his life and join together find money.

    Smart businessman will not fall in to this kind of so called "legal scheme cepat kaya"
     
    #5 BeCool, Dec 9, 2014
    Last edited: Dec 9, 2014
  6. gunnerzz

    gunnerzz 5 Year | Silver

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    Tiger bank..
    See its not that hard....
     
  7. FVel

    FVel Senior Member
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    Yes, but it is still endorsed by the same group of companies, if not directly by the bank, then as an associate or adjunct, but all part of the same group. They share a common name and ultimately their services and products are brought to you by the same people who run the group as a whole (with its core business being banking). Besides, the very nature of their activity (accepting deposits and paying interest) is no different from that engaged by the banks. Presumably they are similarly licensed as the bank or they cannot undertake such activities without infringing the finance laws.

    So, to me its just a matter of empty semantics if they choose to differentiate themselves as the 'assurance' group. They all feed from the same cesspit and to all intents and purposes the same bunch of scumbags beget by the same whore.

    I don't mind people making money. However hard you drive a negotiation or bargain is fine so long as its an honest buck. Everyone's got to make a living but there's something very odious with folks that try to profit by making a sucker of others.

    The really sad thing is that there are plenty of those type 'frens' you talk about who want to jump on the sales bandwagon to push this to the public knowing full well they wouldn't even buy this garbage themselves. People like these will sell their firstborn just to make a quick buck. No f**cking ethics.
     
  8. gunnerzz

    gunnerzz 5 Year | Silver

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    U r spot on about the ethic,
    One of the reason i left the banking industry.

    thats the problem with thw world banking system.
    we just adopt the whole system without studyingthe pro and con.
    ever wonder why islamic banking is accepted even in the west?
    Its because the pure islamic system protect the cust and the whole system from collapsing.
    too bad the so called islamic system implemented is still influenced by conventional system.

    on the product and selling,there are just not much choice from what bank or their sister company offer.its about ballancing their loan to deposit ratio.

    ethic is one value not available on almost all sale people regardless of which bank,investment house,insurance company has.
    All product sucks as financial institution need to have their share but how the product is sold is worrying.agent just tell the good part.by suck i dont mean it will cause a loss but the return is just..well TS mentioned it.
    dont need to mention the Halal and Haram law in Islam.they just ignore it or bend it.

    i have met with salepeople from various bank which are proud of their achievement in term of figure but in term of responsible selling...none.why?
    Its the culture being thought at any bank or investment house or insurance firm-figure,figure,figure.

    Alhamdulillah i have left the industry and still being contacted by my cust to refer some matter despite explaining to them i am no longer an employee and anything i say is from my personal capacity.do i miss my days in banking?..no.

    So,the 2 keyword are;
    -the system
    -the people

    if the system is perfect then the weakness lies in the people which is applied in almost every industry esp manifacturing.
    in this case,both are flawed.
     
  9. FVel

    FVel Senior Member
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    Gunnerzz,

    Banks are banks. It does not matter what they call themselves, - Islamic, Christian, Farmers Bank, People's Bank, or Buddha's Banking Corp. They are all commercially driven institutions with money as the only inducement. Religion has nothing to do with their motivation. If it did, then they will find it impossible to reconcile their pursuit for materialism with the tenets of their faith.

    I personally put no faith in religion or religious institutions. I have seen more than enough zealotry, intolerance, self-righteousness and hypocrisy in the people of religious institutions of all denominations to last several lifetimes.

    As far as ethics and morals are concerned, people either have it in them or they don't irrespective of their religious affiliations. I am of the opinion that no religion, country or political system can truly claim they are more pure and fair than others. It's personal beliefs, and a right and freedom to worship which is protected by the Constitution, but what the Constitution have not been able to do is to prevent people from being a$$holes to each other.
     
  10. Supra_Fanatics

    Supra_Fanatics Senior Member
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    If not mistaken, is the famous HLA Scheme..?
     
  11. EvolutionZ

    EvolutionZ 15 Year | Platinum
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    go for Fixed deposit, gold investment account and some blue chip shares....more secure.
     
  12. vr2turbo

    vr2turbo 5 Year | Silver
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    Fixed deposit is secure but the bank dangle the carrot in front and tell you, can get more. But the more you can get there are also more risk, therefore if can go the other way, but the bank always show you the good side only not the bad side....:thefinger:
    And with greed of the customer, the bank can always win.....:smokin:
     
  13. Supra_Fanatics

    Supra_Fanatics Senior Member
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    Ya nowadays FD also not really that high return. Just that there are "some" return...
     
  14. gunnerzz

    gunnerzz 5 Year | Silver

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    Fd intrest not tht high as bank ofer low interest for their loan product.only sometime there are promotion with a bit higher return as they want to balance back their loan to deposit ratio.
    most of the time the promotion wont be widely advertised in tv or newspaper.just promoted to selected cust by the branch.

    talk abt loan deposit ratio,did u know that some high performing bank actually have a loan to deposit ratio of 80%-90%?
    which mean bank are actually lending money which they do not own in the first place.
    its abt the stroke on the keyboard.
     
  15. vr2turbo

    vr2turbo 5 Year | Silver
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    That is how they make money mah! Money deposited they pay interest, so they loan out higher interest just like ah long but legal ones......hahhahahhahahaq:rofl:
     
  16. Supra_Fanatics

    Supra_Fanatics Senior Member
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    In fact banks are the ah longs with license that have the highest interest.
     
  17. gunnerzz

    gunnerzz 5 Year | Silver

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    High interest mostly applied for business sector.
    For consumer,consider cheap after taking into consideration of the cost of fund.
    p/loan is high interest,thats where the trap is.
    to be honest,the consumer market is too dense and not worth further venture.if u notice,banks are no longer agressive like mad fighting over housing loan sector.now they focus on sme,corporate are handled by head office.
    for housing loan they only focus on hot area.

    where does they make the easiest money?
    service charge....od account,statement request,and all.
    making money out of nothing.
     
  18. vr2turbo

    vr2turbo 5 Year | Silver
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    No brother, Even their highest interest is not high because it is per annum. You try Ah Long one and see, their interest as per T & C, default even worse, get free paint.....:banghead::banghead:
     

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