Secrets To Capital Guaranteed Investment And My Views On The Current Financial Crisis

Secrets To Capital Guaranteed Investment And My Views On The Current Financial Crisis

Firstly, words that you MUST know: Capital protected and capital guarantee

There are two magical words that all should be aware when you purchase any investment products, especially form the banks. One financial term is termed Capital protected; it means that the banks will do their very best to protect your capital (actually they did nothing and let the markets adjust their portfolio closing price). In event that closing price falls below your purchase price when you redeem, they simply said, ‘we tried our best, but fail to ‘protect’ your investments. In other more important terms, it the capital guaranteed. In layman terms, it simply means die-die the bank must return you your initial capital (I hope they can, after a major financial fall). In both cases, profit or loss, you still have to pay them their management fees. That’s how the banks work. So do you know what you have brought, if you ever bought?

Feeling cheated

After the major fall of Lehman Brothers, a great discovery unfold that most of the well-off retired uncles and aunties that visited the banks for updating of huge balanced account, were being ‘con’ by the banks into taking up capital protected investment, which they didn’t fully understand what’s the product is. Basically their main language is Chinese, but the document they signed is fully of ABCs, but none of Chinese characters. They only knew that their greed surfaces when the counter staffs told them ‘ ‘…this will give you a great returns…’ .

What really happens…

While I believe the luring prospectus did not mention a word about Lehman Brothers, they subsequently received calls that their investment might become worthless, due to the recent financial melt down. And they cannot reason why. They fail to understand that, although they brought a strong financial pools units trust, such as global securities funds, most of the companies list inside brought lots of leman brothers shares, which is bankrupt by the failure in mortgage industry. So its like a domino effect; first, mortgage failure, i.e. millions of unemployed owners got no money to pay Lehman Brothers, so it fails, due to huge debts. When it fails, financial companies that brought the mighty strong Lehman Brothers (that’s what they thought) shares, fails. Then almost the whole financial bubble burst out, like a deadly nuclear bomb piecing through thin air. And the effect is going to take years to clear up.

Spiral effects…

As I write, America unemployment hit past 9.0%. That’s means out of 100 people living in the states, almost 10 is unemployed. Unemployment can be a serious threat to the economy. As a living being, basic needs are threaten when there’s no income. When there is no income, the effect is slowly snowballed. No employment, no income, no money to pay basic necessities like housing, food, credit cards bills, cars gases and its installments(this will limit their movement, including new job interviews!). Since unemployed, they got plenty of time, and they become professional part-timers for; shop-lifter for food, house-breaker for money, planners for bank robberies, demonstrators riots to vent their boredom and despair. The list goes on and on.

Its time to think it all over again…

How the respective governments going to handle this crisis will determine whether they will be about to run for subsequence term of political life. But they have to act fast, before the rioters overthrown them out of their political game. In my personal view, immediate steps is to create sufficient jobs to prevent a social unrest catastrophic. Next, is to encourage proper spending habits. There might be a protest from high-end retailers and credit card companies regarding my sincere suggestions. But if the economy is based on citizens that earn $1,000 per month, but had spent $1,500 due to swiping of credit cards at high-end retail stores, the economy is situated above an enormous bubble of damaging debt. Once debt is too high to sustain for the individual, this debt bubble will have a powerful devastating burst, sure you can related to what we just experienced.

Again, in my humble view, proper financial education, which now has been desperately lacking, is the only solutions. It is my wish that when the person have one dollar in his hand, he will know how to spend it wisely. Not just wastefully spend it. What I means it that, for their generational survival sake, turn their one dollar into $1.10, $1.20, $1.30…etc. before you even spend you one dollar.

Great opportunities for a committed reader like you…

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