Investing in $ forex????

[TokyoWart]

No disrespect meant but it’s clear you didn’t understand that investment from the start. These awful insurance products disproportionately take advantage of ignorant, well meaning people who are trying to invest but don’t understand what they should do. The agent who sold you the policy (and may still be earning a commission on it) is the very last person you should consult on what to do.

[N00bster]

thank you again for the comment.

I am not sure if I understand why it is a bad investment?
Honestly I dont understand why my money will increase over a long period of time either...

what should I ask the agent? I am planing to meet with him next week....

I will loose some money if I up out of the plan now....

Ask him about all the different fees you are paying each year (in % of what you have invested, including the funds fees, his own management fee and the one his company takes, plus probably a few others), and see how skillful he will be at evading your question...

If you manage to get a number, please post it here. I personally bet north of 4.5%/year.

Your financial decisions should be motivated by numbers, and only numbers. These schemes are purposely made opaque so you don't know what you are paying. Once you have an idea, you can make a decision about whether it is worth continuing with minimum or no extra investments, or whether it is preferable to bite the bullet.

[StockBeard]

After reading and understanding a bit more about what I was actually investing in, it turned out it was not FOREX but that I was actually buying MET stocks every month. Hence the price in Dollar.

That is vastly different from Forex indeed. Most of my investments are in dollars as well because I have a US brokerage account, but that certainly doesn't mean I'm doing forex.

As others have mentioned, insurance coupled with investment is generally bad at both, but I'm not sure this means your plan is terrible. You have to look again at the details, and understand why you have this policy in the first place.

That being said, what others have said is true. If you're pouring 40'000 yen a month into this, this is not an insurance, it's something that was sold to you as an investment, and it's most likely a terrible one.

What's the name of the product? I'm sure we can easily look it up for fees, etc...

Edit: I've been through something similar myself, a bit less than 10 years ago. After 2 years in the plan I did the math and realized the fees were somewhere between 3 and 4%, which is basically extortion. I canceled the contract, lost 80% of my money (I'm still better off today!), then that insurance company (not Metlife!) made my life hell through legal action when I exposed their fees online. Just saying: you're not the first one or the last one to subscribe to such a contract, not knowing what they're doing.

[N00bster]

Ask him about all the different fees you are paying each year (in % of what you have invested, including the funds fees, his own management fee and the one his company takes, plus probably a few others), and see how skillful he will be at evading your question...

If you manage to get a number, please post it here. I personally bet north of 4.5%/year.

Your financial decisions should be motivated by numbers, and only numbers. These schemes are purposely made opaque so you don't know what you are paying. Once you have an idea, you can make a decision about whether it is worth continuing with minimum or no extra investments, or whether it is preferable to bite the bullet.

Another question to ask your agent is what funds you are currently invested in and in what proportion. Knowing the name of the funds you can look them up and get a lower bound of the fees you are paying. I say lower bound because that would not include the fees for the agent himself (and probably a few other outrageously arbitrary fees).

That's the main problem: you don't know what you are currently invested in and how much you are paying for it. At the beginning of this thread you also didn't know that you were buying funds. Rule number 1: never invest in something you don't understand fully.

Another question to ask your agent, that will make you understand the scale of the conflict of interest, is how much he is personally making through your investment. You said that you are bound for another 15 years before you can get your money back "without too much loss". That's a completely arbitrary and artificial constraint that does not exist on the funds you bought - your agent can sell the funds today at market price. Yet if you quit now you won't see all of that money. Well, where do you think that money is going?

[StockBeard]

Disclaimer: not a professional. The numbers below are provided in good faith but should be considered as an opinion.

Another member of the forum has sent me a copy of their fees for a Metlife contract. Won't name that person here of course, unless they want to out themselves. I am not a trained professional, but I estimate that that person's plan is equivalent to somewhere between 1% and 2% fees per year for the insurance company. As N00bster mentioned above, this is on top of the actual fund fees, undisclosed in the document I was sent, but I wouldn't be surprised if those are 1% or more.

Not sure if it's the same contract as Hárbarðr here, but for what I've bee sent, I'd say we are looking at somewhere between 2% and 3.5% in total fees (1 to 2% for the insurance company, plus 1 to 1.5% for the underlying funds), to compare to an all-inclusive 0.5% fee for a typical ETF at your local broker.

And that's assuming people stick to the plan. If one pulls the plug with an early surrender (which is, counter-intuitively, the best option), then the fees become closer to 8%~100% given that most of the management fees are frontloaded in the first two years.

*100% is not a typo. In the contract I've been sent, you get nothing back if you surrender in the first 2 years.

[Hárbarðr]

Thanks for all the feedback.

Here is my plan from the MetLife homepage.

I’m not good at Japanese, and google read it.

But still the fees are not ready to understand.

Have a read!

https://www.metlife.co.jp/products/life/iswl-dollar/

[Hárbarðr]

Also, the plan is a life insurance as well as saving plan.
If I ever passed away or become sick, my family would get some money from MetLife.

But if nothing Major happens to me, I can just take out that money in due time.

Still not sure about fees...

[StockBeard]

Hi Hárbarðr, I don't read Japanese that well either, but your plan looks different from the other person on the forum, that I was mentioning above.

As far as I can tell, your plan is an Interest Sensitive Whole Life insurance, which appears to come with some guarantees (minimal return per year in particular?). So, this looks like a "normal" whole life insurance policy, with the gimmick that your premiums are paid in one currency, but the benefit is paid in another. That's how I understand it at least (you'd need to share your actual contract for people to see the actual fees, but I don't recommend that you share personal details online).

Now, whether one needs a whole life insurance policy (which does mix investments with a life insurance) is up for debate. I for one would not go with such a contract. It would be better in my opinion to split: handle your investments in a typical brokerage account, and get a term life insurance policy which would be less expensive (but in which you lose the money if you don't die. That's a feature, not a bug). But that's a personal choice, and you should make yours.

As to why you went with the "dollar" gimmick: I'm not sure I'm qualified to explain why this is done this way. But I've used the word "gimmick" twice already, so I guess that's my opinion. It doesn't look like it's harming, but I don't see the point.

But my opinion is that it doesn't look like the awful product I was afraid of. Again, I'm not an expert at all, and insurance in particular is a personal choice! Would love to hear other people's take on this.

[Hárbarðr]

thanks again.

After reading about it more (something I should have to before posting anything about it, and I am sorry for that to everyone), it does seem like not such a bad product after all.

The plan is in Dollars, maybe because the plan/ product itself is from the US MetLife and not the one in Japan, and that they are also saying that it gives some benefits when the time comes and you want to cash in and the currency is in Dollars.

It also said, something I did understand, that I could keep the founds in USD if I want to, that I didn't have to convert to JPY. BUT, how do I then get my money if it is not converted into JPY here in Japan. Well that is something I need to figure out.

As for the guaranty, yes it has a minimum of 3% guaranteed, and I looked at the past 10years, the actually payout was above 3% every month for the past 10years.

I think that for now, I will keep this plan with MetLife, and wait for my Rakuten Security account to be open so that I can start my iDeco investments.

I would loose too much money if I cancelled the MetLife account now... 60-70% I think.

Thank you