Misleading sales talk
An old schoolmate has been bugging us about investing in a retirement fund for several months now. We told her that we would take a look at it when we have a chance to do so. Since she has been visiting us quite persistently, we decided to take a look at the sheets that she passed to us last week.
She told us that the retirement fund is better than CD or fixed time deposit because it’s guaranteed 6% return. We did a little calculations [Well, this is a rare occasion that my background in Mathematics comes in handy.:-)] and discovered that she didn’t tell us the whole truth.
She told me that we need to invest a certain amount for 10 years, then we can either take out the money after 10 years, 15 years, 20 years, 25 years, or leave the money there but take out a fixed sum annually until we die or when we reach 81 years old. What she didn’t tell was: the 6 % return that she quoted is for the last case scenario, that’s when you leave the money there until you die!
If you would take out the money at the end of 10 years, the return of your 10 years investment is just a miserable 2% !! It’s worst than CD!! The lesson learned here is: you should never trust what a sales person tells you without reading up and looking at the fine prints.
