A Facebook user has shared his unpleasant encounter with his friend who is an insurance agent.
According to his post, his friend has introduced him to investing in a new fund with high returns and zero risks involved. He then decides to invest 70 per cent of his saving into the fund. However, in just a few months’ time, his investment incurred a loss which was 50% of what he had invested.
He then confronted his friend and only find out that his friend did not inform him about the losses until the annual report of the fund is about to be public.
His friend then told him that he did not know that investment is risky.
In his post:
“One of my friends is a financial/insurance advisor. He asked me to put my money in this new private fund (let’s just call it Tasty Tulip) that he said confirm plus chop guarantee 20% annual returns with zero risk. Over the past few months, I followed his well-meaning advice and let him put around 70% of my savings into Tasty Tulip.
Today, he told me that Tasty Tulip lost 50% of my original capital! When I called my friend, he said that it didn’t cross his mind that investments are risky and even worse, his boss defended him by quoting the “No Free Lunch Theorem” in finance (smlj?)! Can you imagine how angry I was when this boss said nothing at our prior meeting when my friend gave me his reassurances?!
The worse part of this is that my friend already knew of the losses a few months ago, but only told me about the loss before Tasty Tulip published its annual report. But since he had many sleepless nights worrying about this, do you think I should forgive him and let him manage the remaining 30% of my savings?”