Mutual Funds Products
In banks and insurance industries today, almost half of the sales turnover came from selling investment linked insurance products. These are almost always linked to investment funds. Most of the public how would like to invest on investment funds are either persuaded to buy such products or do not have the knowledge to choose what's really suitable for them. Today, I would like to briefly explain about the basic structures of such kind of products.
First, you need to understand the flowing of the cash you invested into such products. When you pay your lump sum or regular payment to the insurance company or the bank, they would take it to the fund managers who had agreement with them about cost splitting. The fund manager will then invest the money on the kinds of investment vehicles according to what they promised to do. For example, a China fund would be restricted to invest the asset they look after on vehicles that have underlying assets in the Chinese market. Thus, in general, if the industry or the particular resource in the market you chose increases their worth, the fund increase their share price and your monthly statement would show a surplus.
The first cost you would be charged is for the guy who talked to you about this product you just signed. They are the ones who find the customers, persuade them or even deceive them into believing this is the product he has been finding. Insurance companies stand so firmly with indestructible cash flow all because of these great salespersons. And the companies are willing to give them the amount they worth to keep them motivated and keep the cash coming in. The company can pay out as much as fifty percent of all the payments in the first year of a policy as the commission for a sales person.
Next main cost of the product is for the insurance company or the bank. They would suck a small percentage out of the capital you invested into the fund every year, or even every month. The percentage may be small but as the apparent capital grow larger, it can become very frightening. Try computing the absolute amount that they took from you, it may freak you out.
The final main fee you'll be paying with your installments is the management fee for the fund managers. They manage your money, try to give a competitive growth rate and they take a percentage of you capital, hopefully covered by the value increase.
Mutual funds linked insurance products are useful to some kind of people, but definitely not everyone in the society. Before you decide to commit yourself into a policy with 20 years of payments, I recommend you really dive in to understand the cash flow and the cost involved. - 23159
First, you need to understand the flowing of the cash you invested into such products. When you pay your lump sum or regular payment to the insurance company or the bank, they would take it to the fund managers who had agreement with them about cost splitting. The fund manager will then invest the money on the kinds of investment vehicles according to what they promised to do. For example, a China fund would be restricted to invest the asset they look after on vehicles that have underlying assets in the Chinese market. Thus, in general, if the industry or the particular resource in the market you chose increases their worth, the fund increase their share price and your monthly statement would show a surplus.
The first cost you would be charged is for the guy who talked to you about this product you just signed. They are the ones who find the customers, persuade them or even deceive them into believing this is the product he has been finding. Insurance companies stand so firmly with indestructible cash flow all because of these great salespersons. And the companies are willing to give them the amount they worth to keep them motivated and keep the cash coming in. The company can pay out as much as fifty percent of all the payments in the first year of a policy as the commission for a sales person.
Next main cost of the product is for the insurance company or the bank. They would suck a small percentage out of the capital you invested into the fund every year, or even every month. The percentage may be small but as the apparent capital grow larger, it can become very frightening. Try computing the absolute amount that they took from you, it may freak you out.
The final main fee you'll be paying with your installments is the management fee for the fund managers. They manage your money, try to give a competitive growth rate and they take a percentage of you capital, hopefully covered by the value increase.
Mutual funds linked insurance products are useful to some kind of people, but definitely not everyone in the society. Before you decide to commit yourself into a policy with 20 years of payments, I recommend you really dive in to understand the cash flow and the cost involved. - 23159
posted by X - Men @ 7:02 AM
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