Get Rich Quick Sheme

You want to invest because you’re chasing that dream of achieving financial freedom. However, there are way too many investment options out there. Some are legit, some are not. So, how does one differentiate between the genuine and the scams?

Advice from well-meaning family and friends - Many are sucked into investments scams because a trusted friend or family member told them about it. Unfortunately, in these cases, word of mouth referrals can do more harm than good simply because these scams rely on you to invest solely on blind faith. It’s tricky. If you cross-question them about their investments being a possible scam, they’ll insist it’s not and say, “Of course it’s not a scam, it’s worked for me!”

But still… do your research - Researching a potential investment is a simple process. Simply Google: “investment name” + scam. If something pops up about that particular investment, avoid it like the plague.

Cult-ish - Be wary of job advertisements or investment talks that require you attend a “seminar” to learn more about it. This is the modus operandi – you’ll receive vague emails telling you to present yourself at a particular venue. You’ll ask them what it entails only to receive vague replies in return. You attend out of curiosity only to find that there’s a stage at the end of the room where person after person hops on to tell the audience how a particular product “changed my life forever”. While not all of these are scams, enough of them are – so practise caution before signing up.

Ponzi schemes - Ponzi schemes are investments that work, but are not sustainable in the long run. Only those you join early in the game make money here. These schemes are advertised via family and friends and in many cases, seminars as well. Ponzi schemes promise unrealistic returns. For example: “Get 30% returns on your investment in one month!” What they don’t tell you is that you have to go all out to recruit a string of people – where else would that 30% returns come from?

Multi-Level Marketing (MLMs) - Not all MLMs are Ponzi schemes, but all Ponzi schemes are MLMs. On that point alone, you must tread carefully. The network of people in MLMs are pretty cult-ish too. They’ll tell you it’s easy but it isn’t. They’ll tell you there’s loads of profit to be made but you will have to fork out large amounts of cash upfront to purchase their “starter kits”, then sell products they tell you people definitely need. Bear in mind, every product is overpriced.

Some random, super-niche, time-limited opportunities - One of the weirdest schemes involves selling gullible people suitcases full of money soaked in some mysterious ink. The person offers to sell the millions in useless, ink-soaked cash for a song. The person says all you have to do is buy a “soap” that removes the ink. Once the cash is washed clean (literally), boom, you’re an instant millionaire. Other schemers also sell fodder for cows that can supposedly produce 10 times more milk in the animal than usual, so you get 10 times the profit. What they don’t tell you is that the fodder does not come with government approval and can’t be sold in the open market.

Conclusion - If an investment looks too good to be true, avoid it at all costs. What’s a more realistic return when it comes to investments?

• Low risk at 2-8% per year: Amanah Saham Berhad (ASB), fixed deposits, savings accounts, blue chip stocks

• Medium risk at 0-50% per year: Property (the risk depends on location and luck), normal stocks, exchange traded funds (ETFs). This is a very wide category.

• High risk – unlimited returns every year: Penny stocks, Bitcoin. There is a huge risk as you could very well never see your money again.

• Die: Ponzi schemes, random investments

If any investment promises returns of 10% or more a year, research the heck out of it. The only “safe” investments are low risk investments. If you are interested in medium or high risk investments, only invest what you can afford to lose.

Article by - Suraya - website Ringgit Oh Ringgit. 

Monspace Raided By BNM

MonSpace (M) Sdn Bhd, a multinational corporation that uses a direct-selling model led by Datuk Seri Jessy Lai Chai Suang, has landed itself in hot water yet again after 16 of its premises across Ipoh and the Klang Valley were raided yesterday during a joint enforcement operation. This follows a month-long investigation by the authorities.

Dubbed "Ops Coin", the joint operation involved 130 officers from the Ministry of Domestic Trade and Consumer Affairs, the Attorney-General Chambers’ National Revenue Recovery Enforcement Team, Bank Negara Malaysia (BNM), CyberSecurity Malaysia, the Companies Commission of Malaysia (SSM) and the Royal Malaysian Police.

Domestic Trade and Consumer Affairs Ministry enforcement director Datuk Mohd Roslan Mahayudin said the raids also resulted in the freezing of 25 of MonSpace's bank accounts and 47 individual accounts across nine banks totalling RM5.87 million. 

Also seized were computers and company products worth RM980,352 and cash in four currency denominations amounting to RM93,879. The authorities have also frozen the rights to transfer ownership of 26 vehicles worth RM6.24 million in relation to the raids.

"No arrest was made during the raids. We feel there is no need for the founder to be arrested as we were promised cooperation including coming to the ministry's office as and when we require more information. However, MonSpace's personnel are prohibited from travelling abroad until further notice. he added.

Roslan said the investigations are being conducted under Section 27B of the Malaysian Direct Sales and Anti-Pyramid Scheme Act 1993 and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (AMLA) 2001. 

He added that the number of victims who are affected and the value of assets seized in the raids will be revealed later, pending further investigation on the seized documents and data servers. 

MonSpace and Lai attracted headlines in 2016 when Monspace Sky Airlines was found operating a commercial flight from Kuala Lumpur to Langkawi on July 22 without a valid air service permit (ASP), which is required to perform a commercial air service operation. The airline was said to be owned by the MonSpace Group under Lai, and is reportedly operated by Suasa Airlines Sdn Bhd.

Following the incident, the Malaysian Aviation Commission had lodged a police report against Monspace Sky Airlines for misleading the public. On Jan 9, 2017, Suasa Airlines had pleaded guilty for operating without a valid ASP and was fined RM380,000.

Meanwhile, Roslan reminded the public to avoid falling prey to get-rich-quick schemes and to cross-check with the Domestic Trade and Consumer Affairs Ministry, BNM, SSM and other authorities before investing in any such schemes.

High Upfront Commission

A working committee set up by the Insurance Regulatory and Development Authority of India (Irdai) is currently examining the issue of ushering in level commissions throughout the tenure of life insurance policies, instead of the current practice of offering high upfront commissions to distributors prevalent in some policies.

Experts believe that this will improve the persistency ratio (the number of policies still alive and being serviced by customers after a certain time period compared to the total sold) of life insurance policies and reduce mis-selling.

High upfront commissions are prevalent in traditional life policies. Here, the upfront commission paid in the first year ranges from 35 to 40 per cent. It tapers down in subsequent years. In case of unit-linked insurance plans (Ulips), agents' commission is much lower at 6-7 per cent in the first year and then it falls further. One reason for this is the high competition that offline ULIP face from online Ulips, which have a lower cost structure. In case of online Ulips, the commission does not exceed 1-2 per cent and can sometimes even be zero.

If the upfront commission s high and the subsequent commissions are lower, it creates an incentive for intermediaries to churn policies. “With high upfront commission and low renewal commission, distributors often influence customers into buying new products every year instead of continuing with their existing policies. This ends up eroding the value of the investment made by the policyholder. If policyholders keep paying annual premium subsequently, that doesn’t benefit the agent as much as if they buy a new policy. For example, if a customer pays Rs 100,000 as first-year annual premium, the agent gets around 40 per cent, or Rs 40,000 as commission. But in the second year, his commission may dwindle to only 10 per cent of the annual premium, or Rs 10,000.

Level commission structure already exists in health and general insurance (motor) and in mutual funds. In mutual funds, the agent's commission is a percentage of the investor's asset. Hence, his interest lies in making his client's asset size grow. In case of insurance, an agent's commission is linked to premium. In a traditional policy, it is high in the first year and then it tapers down, becoming quite small after four-five years, creating an incentive to churn.

Life insurance in India has a low persistency level, especially after the fifth year. A level commission structure, experts believe, will do away with agents' incentive to churn and help improve persistency.

A high upfront commission also affects a policyholder in case he wants to exit his policy early. The cost of a premature exit from a policy is borne not by the agent or the insurance company but by the policyholder. “High upfront commission is the reason why the surrender value of some life insurance policies is low. If a policyholder surrenders his traditional policy after one-two years, he gets nothing. If he surrenders after three years, he gets around 30 per cent of the premiums paid so far. This figure increases gradually as the years go by, but it never becomes 100 per cent. This is because the insurance company has already paid a hefty commission to the agent. The burden of this gets passed on to the policyholder.

According to experts, instead of opting for a traditional insurance plan, investors should look at a combination of term plan and mutual funds. This combination will allow them to buy a higher amount of insurance and also earn better returns on their investments, besides providing them the flexibility to exit without paying a high cost.

Smoking Is Expensive Hobby

New analysis by MoneySuperMarket today reveals that smoking, including e-cigarettes, can increase the cost of life insurance premiums by as much as 65 percent, which equates to over £312 every year.

Interestingly, insurers do not distinguish between daily, occasional or social smokers – if you’ve smoked in the past 12 months, you could end up paying more for your life insurance premium, an essential purchase if you have dependents. With their long-term effects on health yet to be agreed by experts, e-cigarettes are also viewed in the same way as normal cigarettes for life insurance purposes.

MoneySuperMarket analysis of quoted premiums for life insurance policies between January and April 2018 reveals that, on average:

• Smokers pay £26.07 more for decreasing term insurance with critical illness cover (CIC) included
• Smokers pay £16.59 more for level term cover with critical illness cover included – 48 percent more than non-smokers

With decreasing term insurance, the amount of cover reduces over the term of the policy, usually to reflect the reduction in the amount owed on a capital and interest mortgage. With level term insurance, the amount of cover remains the same for the duration of the policy.

According to MoneySuperMarket data, the highest proportion of people who have smoked within the last 12 months are between 36-45 years of age (30 percent), closely followed by 46-65 year olds at 28 percent. This is in stark contrast to under 25s, with only one in 20 (5 percent) having smoked in that time period.

Regionally speaking, the North West and South East of the country tied for the highest percentage of smokers. Just over one in 10 (12.6 percent) in both regions smoke, closely followed by Scotland with 11.7 percent, while Yorkshire and Humberside had the lowest proportion of smokers with just 8.8 percent.

Aside from existing health conditions and whether the applicant smokes, age is also a clear factor that affects the cost of life insurance. Analysis shows that monthly premiums skyrocket when taking out a policy over the age of 45 – as much as double the average price.

Variations in insurance premiums, broken down by age and group

	< 25	25-29	30-35	36-45	46-65
Decreasing term	£15.89 CIC £4.44 no CIC	£22.67 CIC £5.18 no CIC	£31.29 CIC £6.63 no CIC	£57.48 CIC £11.32 no CIC	£124.49 CIC £25.77 no CIC
Level term	£12.60 CIC £6.23 no CIC	£15.67 CIC £7.05 no CIC	£21.66 CIC £9.19 no CIC	£36.67 CIC £15.10 no CIC	£83.09 CIC £35.01 no CIC

CIC stands for critical insurance cover, an optional extra that pays out a tax-free lump sum in the event of being diagnosed with a specified illness or medical condition during the term of your policy.

Kevin Pratt, consumer affairs expert at MoneySuperMarket, commented:

No one likes to think about death, but anyone with dependants needs to plan for the worst. Life insurance is there to provide financial support by clearing outstanding debts and, with some policies, providing funds to meet living expenses. The impact on families where no cover is in place can be devastating.

If you give up smoking and do not ingest nicotine for 12 months, you’ll be regarded as a non-smoker by life insurers. If you already have life cover and successfully give up smoking, it’s worth telling your insurer to see if they will adjust your premiums accordingly. Alternatively, you could run a fresh quote as a non-smoker to see what prices are available.

Remember, using nicotine in any form, including patches and gum, means you’ll be regarded as a smoker - you have to be nicotine-free for 12 months to get the lower premiums.”

To find out which life insurance policy is best for you, visit MoneySuperMarket’s range of guides on how to save money when searching for a policy. 

Prudential & Babylist Partnership

Prudential Financial, Inc. and Babylist, the fastest-growing baby registry in the United States, launched a new strategic relationship to create a crowd-funded life insurance solution designed specifically for expecting parents, which is now available as an add-on to their baby registries. This is the first time a life insurance company has partnered with a baby registry.

Babylist conducted a national survey of nearly 5,000 expecting parents, and found that 97 percent said life insurance is important and 61 percent plan to get insurance in the next year.1 Yet, planning to purchase often does not translate into ownership for the growing number of millennials who are becoming parents,2 as only 18 percent of millennials own individual life insurance.3

The strategic relationship between the two companies will bring a wealth of informational content about preparing financially for a baby and provides the option to add Prudential’s life insurance* directly to their registry with just a few clicks.

“Having a baby is one of the most exciting — and overwhelming — times in life. We are pleased to partner with Babylist to make it easy to buy protection designed specifically for new parents. Expecting parents often feel financially pressed and may not think about how life insurance protects their young family and contributes to financial security,” said Salene Hitchcock-Gear, president, Individual Life Insurance. “One-third of registries new parents make in the United States are with Babylist. This strategic relationship between life insurance and a baby registry is a prime example of how we are engaging customers in new and unexpected ways.”

“I started Babylist because no other option gave me the opportunity to register for items I really wanted as a new parent, like dog walking and meals, in addition to the basics like strollers and bottles,” Natalie Gordon, Babylist CEO, said. “Eight years and millions of registries later, Babylist is pioneering new options for expecting parents to register for exactly what they need. Given our customers’ interest in life insurance, we think that a strategic relationship with Prudential, a company that people have relied on for their protection needs for more than a hundred years, makes perfect sense for our users.”

Expecting parents who create a Babylist registry will see the option to select a Prudential policy alongside other preparing-for-baby necessities, like car seats and cribs, and ask friends and family to contribute towards the life insurance premium. A custom tool created by Prudential and Babylist helps estimate how much life insurance coverage is needed for their family. After funds are gifted to the expecting parents, they will have the option to visit Prudential’s website to apply for a term life insurance policy.

About Babylist - Founded in 2011, Babylist is the fastest-growing baby registry that lets expecting parents put any item from any store on one registry. Babylist serves expecting parents with its universal baby registry, newsletters, and Hello Baby, a digital magazine, combining data, content and technology to help expecting parents get the best for baby.