Avoid them if you want to profit
A couple of things happened this week: a reader contacted me to tell me about the 65% loss he suffered in an expensive offshore pension product sold to him by a company in Tokyo, and Andrew Hallam published an eye-opening post full of concrete examples of horrible experiences people have had.
Be really careful out there.
The nature of these funds (the high charges levied for the life of the fund) means that cashing in early will always mean a significant loss. If you look online, nearly all complainants seem to be those who want to cash in early. Now, I agree with all you have written and know that a DIY approach in index funds would almost certainly be better, but I would be interested to hear from anyone who has seen an offshore fund through to maturity. As I understand it, you can leave the funds in place when the policy matures and wait until an optimal time to cash in, so to speak, and thus if the funds are down you could wait for a spike in the markets. Yes, you would be better doing it yourself, but do those that actually see these policies through to completion actually lose money ( I mean on the capital, not just in comparison to alternative investments)? Would be great to hear from people who have actually seen such a policy through to maturity!
I think the high charges (3-4%+ a year) mean that once you have signed up it is almost always better to pay the penalty charges, get some of your money back, and do something more sensible with it for the rest of the time.
Add to that the fact that funds don’t seem to be sensibly allocated, but instead focus on assets that have gone up recently (makes it easier to sell to unsuspecting punters) and you end up with serious underperformance.
The icing on the cake is that I don’t think gains would even be tax sheltered under Japanese law, and not reporting them can result in severe penalties, and the whole thing just stinks.
I wouldn’t mind if people were making informed choices either, but they are not. Instead they are given the hard sell by commission-compensated ‘advisors’.
I think these ‘advisors’ are on the same level as the ‘ore ore’ scum.
But you’re right, I haven’t heard of any happy customers either 😉
I’ve got one and it goes up and down – has been both 15% up and about the same down at times. Right now it’s about the same as it would have been in a bank! I signed up before I knew anything about investing, but I’ll probably just see it through. It’s not my only investment and I’m due bonuses soon. Got about 5 years left on it so we’ll see how it pans out! Right now, I’ll be relieved if it breaks even!
I’d love to feature a guest post or summary of your investing experience -from buying this to learning more and diversifying. That’s if you ever feel the need for a break from writing excellent travel humour books 😀
I don’t think I would have much to offer, still being a rank amateur at all this! But, if I do think I can contribute something, I’d be happy to do so. In the meantime, I will read and learn from others here.