I met the chairman of a Friendly Society in Australia. They have 300,000 members. They make regular saving for the education of their child or grandchild.
The savings go into their personal account. The earnings from the investments go into a separate fund to pay for the university education of the students who made it to the university.
The parents or grandparents are happy with this arrangement. If their child or grandchild make it to university, the expenses are paid for under the "scholarship fund". If not, the earnings are used to help the child of another member.
The member can withdraw back the principal, if the child or grandchild does not go to university.
This is the first time that I have heard about the pooling of the investment returns to help the students who makde it to the university. This is the concept of a "friendly society".
A friendly society in Australia is similar to a cooperative society in Singapore. They work on similar principles, although the mode of operation may be different.
Tuesday, June 5, 2007
Expensive watches
I heard that many people have invested in expensive watches in Singapore. This is how the watches are marketed.
* Usually, the wateches are from a well known brand name.
* The customer are told that the prices of the watches will increase in price by 10% or 20% soon. You have to buy the watches now to enjoy the low price.
* Many people bought the watches and paid $5,000 to $10,000 for each watch. They think that they have benefitted from the 10% to 20% discount.
Think again. What is the value of the watch? You can buy a good, practical watch for $100. Why do you have to pay $5,000 for a watch, just becuase it has a good brand name?
* Usually, the wateches are from a well known brand name.
* The customer are told that the prices of the watches will increase in price by 10% or 20% soon. You have to buy the watches now to enjoy the low price.
* Many people bought the watches and paid $5,000 to $10,000 for each watch. They think that they have benefitted from the 10% to 20% discount.
Think again. What is the value of the watch? You can buy a good, practical watch for $100. Why do you have to pay $5,000 for a watch, just becuase it has a good brand name?
Financial products in Australia
My friend in Australia told me that many banks in Australia are selling complicated financial products that are misleading to the consumers. Many investors have lost a lot of money on these products or obtained a miserable return.
The investors were asked to read a prospectus of more than 100 pages. Even a financial expert cannot understand what the product is.
It seems that the regulators in Australia do not check on the content of the prospectus or do not take the responsibility to approve the product. The investors have to take their own risk.
I told my friend that a simular situation exists in Singapore. It seems that the regulators in both countries follow the same approach, "let the buyers beware".
The investors were asked to read a prospectus of more than 100 pages. Even a financial expert cannot understand what the product is.
It seems that the regulators in Australia do not check on the content of the prospectus or do not take the responsibility to approve the product. The investors have to take their own risk.
I told my friend that a simular situation exists in Singapore. It seems that the regulators in both countries follow the same approach, "let the buyers beware".
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