Dear DIMWIT KID!DimWit Kid wrote:ksl, not trying to be offensive, but what's your real gripe? Banking system is one of the most useful system invented for capital and money flows. As with other systems, there are always bad apples, there are always weaknesses, but if you use it right then in general it should be okay.
Credit card for example, as long as you have your discipline, where does it hurt? As long as you pay on due date, you actually get a free working capital (considering many of the credit cards are free nowadays) for half to one month. It is, of course, different for people who rollover their balance - the credit card interest can be a real menace. But these people can hardly complain - the terms and conditions are mentioned upfront that they charge a loanshark's kind of interest!
Banks - they're financial institution, driven and incentivized by economic reason, and act on a predictable sense based on those. So what's new? You borrow, you default, they bankrupt you. Nothing new, and nothing wrong (well, in some cases it needs to be prevented if it affects livelihood of large portion of masses). But in general, I still don't get the background of your gripes.
Insurance - hmmm so far in Singapore my experience with direct insurances are okay. You just need to get a good agent (and additionally study the plan they offer before plunging in). I am staying clear form ILP's though. Not much use imho, and if I want the investment part I can always do better myself rather than paying additional premium for a fund manager in an insurance company to invest don't-know-where.
Approximately one in four people are now in serious debt in the UK thanks to the activities of credit card companies and banks. All too often they encourage people to spend what they in reality, do not have. No sooner does the customer get near the limit the creditor ups it thereby increasing repayments not to mention the interest.Wind In My Hair wrote:
Credit cards are the worst. They are great for people who pay off the balance every month, but if everybody was like you banks would do away with credit cards as they wouldn't survive. The majority will pay outrageous interest for years, sometimes adding up to more than 10 times the price of the items they originally used the card to pay for.
I basically agree with you, Yet I find it very hard to come to terms with the system, that makes the rules, forces people into situations they never wanted, simply because its business.DimWit Kid wrote:First of all, I'm not working for the bank - not even close - I'm not even in financial job. However I do deal a lot with the bank, and so far I am alright since as I said, I always try to discipline myself in paying off the dues. What I implied in my earlier post is that we need to see the situation in a more balanced view.
I still do not agree that the bank is the sole source of the problem. There are systems to check and countercheck the practices. That's why in every country there is always central bank (MAS, the Feds, etc) to lay down the basic rules of banking in the area. To just blame the bank and even go to the extent of saying that the world will be better without banks and their services is really an over-reaction. I mean, how would you regulate and facilitate the funds traffic without them? Getting paid well is alright and well, but I tend to think of the bank not only as lenders, but also as service provider, which is in my opinion their most useful role in the society.
What is the alternative system? For everybody to dig a hole and put their money in it? And then pay everything by cash? Leveraging for investment is sometimes good when you know what you are getting into. Merely saying the bank is bad without proposing any solutions (or only proposing one-size fits all solution without looking at the positives and negatives in a balanced view) is not correct either.
Having said that, I do agree that 'exploitative' acts need to be controlled - for example, I wondered why after much publicized millions of credit card defaults, MAS lowered the credit card requirements. I also agree that the credit card business is really one of the area that needs more strict regulation. All is good in the beginning, but when the bank gives a credit limit equals to 2 months salary, and then noticed that the customer spends and rolled over the balance, there needs to be a stop-valve so that the customer does not overspend. This is why personally I feel that there is a need to consolidate balances between various credit cards/overdraft owned (eg for people who owns 5-10 credit cards, so effectively having a credit limit of 10-20 times monthly salary) so that the financial health of the public is safeguarded. Having said that it is also not easy to manage, since for example I sometimes used my credit card to 3-4 times my monthly salary in a month (for reimbursable expenses, not purchases). How will that kind of thing be managed? It is not straightforward but in the end if the usage of the system is not abused, then even credit cards shouldn't be a problem.
The answer is not to kill all banking systems - it again lies in the public education, personal financial discipline, and an early warning system if the customers are going overboard. Like in the case of WIMH sister's job, the financial requirements for approving loan should be stricter. And that's the job for central bank to define it (so in a way - I agree with Plavt that some political issue is there).
My view on credit cards: Credit cards are not for buying something someone cannot afford in the first place - it is a way of convenient financing (the ridiculous interest rate should be avoided though - so only use it for short term financing where the ridiculous rate is not charged) and a convenient payment method. It has nothing to do with whether people are paid decent or indecent wages - people with low wages should actually have less access to unsecured consumer credits, thus, should not have the access to high credit limit with their credit cards.
And lastly, I think the concept of credit cards are not (only) to profit from outrageous interest (in fact if the interest is not outrageous, those people with ill-financial discipline will spend even more, right?) - they charge the vendor upfront 3-5% or so.
DimWit Kid wrote:
My view on credit cards: Credit cards are not for buying something someone cannot afford in the first place - it is a way of convenient financing (the ridiculous interest rate should be avoided though - so only use it for short term financing where the ridiculous rate is not charged) and a convenient payment method. It has nothing to do with whether people are paid decent or indecent wages - people with low wages should actually have less access to unsecured consumer credits, thus, should not have the access to high credit limit with their credit cards.
And lastly, I think the concept of credit cards are not (only) to profit from outrageous interest (in fact if the interest is not outrageous, those people with ill-financial discipline will spend even more, right?) - they charge the vendor upfront 3-5% or so.
renter wrote:As Jack Meyer said when he was still in HMC, the whole investment industry is a giant scam.
And as Warren Buffett said in a Fortune article, reduce your gains. All of those rogue traders are taking away the investor's money.
And on a local show the other day, one financial adviser was asked whether he made any big investment. His answer is no. So how can you trust them if they themselves don't trust it? If you put it another way, they are simply plain liars. I know one person is not representative of all, but I bet that most of the advisers don't follow their advice that is well crafted to their customers.
If you have truck load of money, you can attract really good money managers. But for a commoner, your money only attract cockroaches.
Saving money is still the prudent and reliable way to build up wealth for the working class. The rule has never been wrong. We haven't seen anyone become rich just by investing his hard-earned money. Buffett is a successful entrepreneur before he is a successful investor, he built the Berkshire company.
Quite rightly so, and money makes money, with what he's got and the networking system, inside information is not hard to come by. Its been going on for years, and will continue that way, one only has to look at Martha Stewart, and the president of Taiwans, son-in-law to see how the privillaged get on for inside info.Buffett is a successful entrepreneur before he is a successful investor, he built the Berkshire company.
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