The Answers Are In The Questions

Hi All.

I'm writing this because I've noticed a lot of people are seduced by the word "investor". They like that term. "I am an Investor. I have invested in the stock market". They are sometimes so quick to sign the bottom line of a policy contract because they think it adds some 'prestige' in their lives. They've heard Warren Buffet makes a killing in the capital markets, so it's easy right?

Wrong. Why? Because many a-times, from the onset, they don't ask the right questions!

So to help you, here are a few questions to ask a broker or an investment firm before taking up an investment policy:

- Are you guys regulated? Proof?

- Where is my money being invested? Onshore? Offshore? In what percentages?

- Who are the investment managers (if any)? Are they regulated?

- Do I get a say in what funds are in my portfolio? Or is that at the discretion of the asset manager.

- What mutual funds do the asset managers or you, invest in? Or what is their/your investment mandate? Is it high, moderate, or low risk? Can I see track records?

- What are the fees?

- Can I see an illustration? (This illustration helps you understand how much your investment will be in X amount of years using different growth rates).

- What is your educational background? Since I am taking up a policy with you, does this mean you are now an adviser?

- Will you be pro-active and be giving me frequent updates about my policy or will you keep quiet until I call you? Will my valuations show how much I've put in vs how much my portfolio is worth?

- How secure and confidential is my policy? Do creditors have access to it? Bitter ex-spouses?

- What is the initial period? (This is the lock-up period). And if I pull out early, how much will I get back?

- These returns you are showing me; are they guaranteed? If they say "yes", ask them how? What measures are put in place to guarantee those returns? NB: The only thing guaranteed in life is death.

- Taxes? Tax-free? No?

- If I can't continue payment after a few years due to unforeseen circumstances, what happens to my policy?

- Can I add beneficiaries to my policy? If I die, what happens?

- Is my policy automatically indexed to inflation? Can I opt out and decide to increase it whenever I want?

To those who have an already-existing policy, I urge you to sit down and do this: Call up your broker (if you have one), and ask them for your valuation. Ask them what the current value of your policy is. After they tell you, ask them if they have data to show you how much you have invested since you started.

If they don't, sit down and calculate how much you've paid since inception. You can use estimates if you don't remember. And after you get your total, compare it to your valuation. You'll then see if you are on the right track or not.

Be pro-active. Don't take your financial life for granted.

Any questions? Thoughts? Additions? Let me know.