Banks Loans and Credit Facility

Today I received a call from a bank in Malaysia asking if I would like to take a loan from them. I had received numerous call such as this in the past but however , it never came across my mind what is the implication in our society today.

Banks today are very profit orientated in reaping interest from loans which is the revenue for banks . In the matter of fact they are actually destroying the retirement planning of Malaysian wheater we realize it or not. They are not encouraging force savings for rainy days but instead they are asking us ( the consumer) to apply for loans thus we will use our future income to buy unnecessary purchases.

Promotion such as Credit Cards & Personal Loans are very common and are well marketed.

We had been burden by the housing loan and car loan and on addition we incurred credit loans /unsecured loan such as credit cards which increses our household debt.

It diminish our plan for savings and at the end of the day we cannot retire and continue to work because we have no choice but have to work in order to do repayment.

Proof of Malaysian banks discouraging public savings;

1) Low interest rate
2) Increase the advertisment on consumer spending such as credit cards, personal loans & etc.
3) Promote more on investments financial programme* ( please see below)

For investment product, banks collect the monies , earns the commission but transfers the "RISK" to the consumer. The banks makes profit if the unitholder gains or even loss in the investment deal.

When we talk about investment, we are talking about capital market such as shares and stocks.
If anything to do about investment, we are talking about risk.
How many of Malaysians or shall I say the lay man are " financilly literate" in investment in capital market which involves loss in capital. No doubt there are a handful of the so called " investors" that make money but a majority of the public lost their money as well.

A good example I met with a guy staying in a remote village in Penang;-

He was approched to purchase a unit trust of 50,000 units which is priced at RM 1 /unit. The marketeer whom is also a banker promises of ROI ( Returns of Investment) of 26% as quoted in brochures but however that was not the case when the guy came to redeem. He kept the certificates for 2 to 3 years and when he came to redeem ,the amount of money that he got was approxiamately RM 38,000 which is far less than RM50,000 . - He incuured a loss of 24% instead of 26%.
On top that he had to bear the Fund Mangers fess and misc expenses.

Supposingly the so called " Fund Mangers" are suppose to ensure to maximize the returns but however it turn out to be at loss. So why the heck should we pay the Fund Managers for!

If this poor guy would had put his money in FD he would make RM 55,168.08 ( assuming the interest of FD remains 3.5% for 3 years compounded)