Be Aware of Alternative Investments

Sometimes we seek for alternative lifestyle to live life to the fullest. I believe many would agree that having the freedom to choose the kind of lifestyle we want is important. To do that, we need to know what the alternatives available are. Some of us choose to live simply by identifying the many things that we can do without. And live with the things that we need and choose to do what we treasure and enjoy most. However, there are some who prefer to pursue material wealth and enjoy life now. They are living in the now and instant gratification is not an uncommon sight.

As for investment, we need to be careful with alternative investments. According to my observations, it is becoming common in the recent years to see numerous newspaper advertisements on such investment every few days. Since the local bank interest rates are miserably low and the bond market though stable, but is not giving much returns; many investors have turned to alternative investments,

I first heard of alternative investment a few years ago through a property networking workshop. It is interesting to know that investors are invited to invest in projects which they have not seen or heard before.  Most investors have never seen what they have invested in, unless they invest a stipulated substantial amount to warrant a free trip to visit the site of development.

Last year, during one of the investors’ gathering, I spoke to a few investors who have invested in event management, ostrich farm, mushroom farm, and bird nest farming businesses. There are some who invested in land banking, medical centre, car park, hotel rooms, student hostel cum apartment and houses. These are mostly overseas projects which investors have never known. These projects are located in Malaysia, Philippines, Hong Kong, Australia, Britain, Brazil and Germany. Investors depend on the due diligent check done by the marketing agents who are brought in these overseas projects to its members. One of the investors shared that she had lost a substantial amount in the bird nests farm investment.

As loan takes a long time to process, overseas developers and entrepreneurs raise funds from countries which have high liquidity- China, Japan, Taiwan, Singapore and Malaysia are often sought after. These vendors offer lucrative rate of returns to attract investors to invest and high commission to the marketing agents to raise fund on their behalf. The duration of investment is usually between 12 to 24 months. It all depends on how the deal is structured.

Be careful to research and do your own due diligent check on the marketing agents that structure the deal. Do not deal with agents who have no past credential as some are just there for a short-term. It might be a sham. It is more sensible to deal with an agent who has been in the business for many years with good track records. However, sometime unfortunate event might arise when the oversea vendor failed to honour their part of the contract. In such instance, investors have to rely on the marketing agent for legal support, especially if the investors are its members.

Depending on how your marketing agents bargain with the developers. Do they ensure the protection of investors’ interest by incorporating insurance of investors’ fund in the contract? During the presentation, you are required to sign a Letter of Intend to ‘reserve’ the amount to invest. If there is an overwhelming response, you will be put on the queue list. However, do not mistaken that this letter of intent is a contractual document. Subsequently, you will be given a contract to sign after the submission of cheque. However, before you get the actual contract, ask your sale consultant to email you a sample of the original contract for your consideration, If he or she hesitates or delays, it may means something is not right. Usually, a professional sale consultant would oblige and send you a sample of the contract for viewing after you have signed the Letter of Intent before you submit your cheque. My advice is that you do not sign the contract if you do understand or feel uncomfortable with some of the clauses in it. You may wish to seek legal advice before you commit. I feel that the contract is unfair, especially if my fund is not protected, or if it were inclined to protect the vendor or the lawyer that act on my behalf in my oversea investment.

I believe as investors, we should do our due diligent check on the marketing agent that present the projects and also find out more about the country which you intend to invest. In all investments, the element of risk always exists. As such, invest the amount which you are comfortable with and be prepared for delays in payment, especially in the construction of property. The delay can range from six months to a year. Hence, you should not invest if you are unable to accept late payments due to delay in the construction of property. Obviously you should not invest your emergency fund; only invest spare idle cash which you don’t need in the next few years.

It always benefits the marketing agents and the sale consultants to market the projects to you since they receive commission. Do not be convinced to part with your money until you are satisfied with your research. Ask as many questions as possible to clear any doubts that you can think of before you sign the contract.

 

 

 

 

 

 

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