Why High Yield Investments are for Accredited Investors

My IB has indicated that he is unable to continue business with me. This means I need to explore other methods of withdrawing and funding my investment – only Perfect Money (a payment processor) and BitCoin are platforms the FOREX broker deals with.

In the States, an Accredited Investor is someone with a net worth of USD 1 million, or an income of USD200,000 per year for the previous two years. In Singapore, the same class of investors is someone with net assets of SGD 2 million, or an income of SGD300,000 in the past 12 months.

Many classes of high-yield investments like hedge funds, FOREX funds, etc, are allowed to be marketed only to such people (so nobody is allowed to market those investments I am investing in to the “common folk”). Such investors are considered to be “sophisticated” enough to understand the risks involved in such high-risk investments.

I have been reading the Telegram chat group of my FOREX investment. Each time the Introducing Brokers (the financial intermediary with the FOREX broker) encounter issues with the large volume of money to send, jitters would fly in the group. Each time there is a down-time in the FOREX broker, jitters would fly in the group.

And after reading about how some had borrowed from their credit cards to invest, how some had pumped in their life savings into the investment scheme, I can understand. Fear and Greed are both ruling right now, and it is very, very difficult for those investors to truly be prepared to part with their money were the scheme to go south and fold (as had happened many times, to so many high-yield instruments).

And after being through these for years, I understand why virtually all governments around the world insist on such high-risk investments to be marketed only to accredited investors. No monetary authority want to be dealing with such issues from their voters, and would rather ban and issue advisories on such instruments when they surface within their shores (the offshore nature of such instruments mean they can no longer be regulated like in the past).

The latest saga, with IBs withdrawing on masse from dealing with their customers, with outstanding withdrawal issues (long waiting times for withdrawals to both BitCoin and Perfect Money, both channels that the FOREX broker allows) make the investors even more edgy and dicey.

There is a reason why we always, always, always invest in high-yield instruments with cash we can afford (not just financially, but also emotionally) to lose. If I were to be so bold, this applies to even low-risk instruments as well. Nobody should invest with cash we cannot afford to lose.

Why I Prefer Investment MLMs Part I

It was a very enlightening conversation I had with Alex, one of my mentors in investmenting. What he shared is precisely my experience with many MLMers who burnt out, which is why I prefer to invest in investment MLMs rather than product MLMs.

WHY I GET SUSPICIOUS WHEN MLM’ERS WON’T GIVE ME STRAIGHT ANSWERS

I find it very interesting that practically most MLM’ers will not give me a straight answer to the question: “How long have you been at your MLM business and how much are you making now?”

Usually they will divert to talk about how much their upline is making. I am not interested in how much your upline is making. I am more interested in what you have made after all the years you are in if you say the business you represent is really that good and lucrative.

If a business proposition or investment is that good, I will be prepared to divulge the exact details as to how it is that good and will even open my accounts to show “where is the money”!

Also, when I state some industry statistics about only 2% of the industry being successful and the 98% being unsuccessful, they tend to justify. However, I am adamant about the fact, that I cannot be comfortable with me being successful and most of the friends I bring in being unsuccessful. To me, any friends I bring into any scheme MUST somehow benefit one degree or another and be happy about it.

I am inclined to believe they are lying; or making a show; or not willing to tell or face the truth. For example: A jaded junior MLM’er told me how her upline keep calling her to keep at the business by approaching more and more prospects without qualifying them as to whether they are suitable for the business proposition. She has spent RM14,000 and after speaking to 100 prospects using brochures at her own cost, she enrolled one and got back RM7,000. To me, that’s highly inefficient and very, very tiring. Now, she wants to get back the other RM7,000. And I can see that, the obsession to get back that money is debilitating her: tired, not focused, no brightness of eyes; not managing her life as well as she should.

She keep harping about her her indirect uplines are always on stage to receive their prizes and driving big luxury cars, trips, fine dining, etc. etc. I advised her to get to know them closely, visit their houses, see their families to see what the real situation is. When I said that, she realizes that one of the higher upline’s marriage is on the rocks – probably spending too much time away from his new spouse.

I am also inclined to believe that most of their income are spent on flashy cars and houses to give an impression that they are “successful”; racking up high debts. I am also inclined to believe their families are neglected while they run up and down the country to support their downlines to recruit new “victims”.

I did, however, managed to elicit some information from a close friend as to how much a product/service based MLM makes. The answer is usually about RM15,000 to RM20,000 after a few years (usually 3 to 4 years). Do you consider that successful? Personally, I don’t think so. There are a number of more ethical business that can give better returns in a shorter time without creating so many “victims”.

In the end, my advice to that lady MLM’er? “Give up the RM7,000 and move on. I have personally given up RM100,000 and moved on when I find out that the company and uplines are turning the MLM into a money game and front loading the new comers!”

If you are looking for a way to make your USD 1300 give 8 percent returns every month, feel free to contact me.

Beginning a New Investment Cycle

It has been an incredible and interesting journey, and I have completed my one-year contract with the FOREX broker. ON 27 July, my investment account was automatically terminated as per my agreement with the broker, and my USD1000 in that account returned to me.

I have decided to reinvest that amount into a new account (allowed under the investment agreement with the FOREX broker) with a fee of USD30 charged to me. This would allow me to continue my 8+% monthly returns every month for another year.

As I continue with the world of HYIPs, I cannot help but continue to remember why the rich always get richer. The FOREX broker allows each individual up to USD100,000 in the fixed income investment. I cannot afford such potential losses and so have to limit myself. The rich, including some Malaysian Dato I know of, can afford such losses and so could pump in the full amount, gaining USD11,000 every month (it is no longer 8+% but close to 11% at these amounts). Accounting for the weak Ringgit, they are really laughing all the way to their banks.

In the world of investments, wisdom is important. We need to increase the velocity of money so that we can catch up in a world of fiat currencies and ever-degrading actual income (when compared to inflation).

For more information on making 8% a month with an investment of only USD1300, feel free to Contact Sensei Michael.

The End of an Investment Cycle

It has been nearly a year since I last invested for a monthly return of about 8% each month. The company just reminded me that my yearly investment cycle (the contract locks my investment for a year) is up, and I should choose either to renew at a returns of 3% less each month (about 7% after calculating for FOREX) or to withdraw and to start a new contract for a one time fee of 3% of the investment of USD1000.

I thought the math was very straightforward and somewhat of a no-brainer. I have chosen to withdraw and to start a new contract.

The other HYIP I have started (which I have expressed doubt in my previous post) has collapsed. There is a reason why I only invest a tiny amount for such HYIP. After this episode, I have told myself not to invest any more into any HYIP where the leverage just does not work out, or where the outlay is so ridiculously low (USD10, anyone?) that it being a money game is just so clear. I have to learn to listen to my hunches when it comes to investments. The first rule of all investments, after all, is not to lose money.

For more information on making 8% a month with an investment of only USD1300, feel free to Contact Sensei Michael.

The Second HYIP and Sustainability

Found another HYIP that pays 2% per day for 10 days with a capital of USD100, upon which profits is returned together with the capital. So far all HYIPs with such low capital outlay have not lasted long (unlike the other one I have invested with since July 2015), due likely to the fact that anything more than 1% per day is going to be difficult to sustain, and that is with FOREX being used as a trading platform.

For someone like me, who was used to comfortably doing 1-2% a month selling options in the US stock markets in the past, the amount of leverage those guys are getting into is really incredible and mind-boggling. I have learnt to keep an open mind, however – because there are many who found my 1-2% a month equally mind-boggling. As I began understanding the world of high leverage, I learnt that they can be done – just not done by everyone.

All forms of high-yield investment programmes have to deal with the issue of draw-downs. A move against the predicted model, a long-tail, a black-swan event, could all wipe out a considerable amount of capital, making it difficult, if not impossible to keep to the programme’s promise to its investors. And when that happens, not many fund managers do the right thing, to be open with their investors and close the fund or stop the payout. Many of these fund managers eventually turn to running a ponzi scheme in order to milk their investors for as much as possible before they run.

Unlike the easy 5-8% a year that most registered mutual funds offer (and even that return is not guaranteed, to protect the fund’s viability), the world of HYIP is run on different rules, and require a different kind of personality to play it. Are you one of them?

Contact Sensei Michael if you are interested to find out more.

Dropping a Payment Processor, and Using BitCoin

My portfolio is now ahead SGD243.60 (I included the bank charges that I incurred when I first entered into this HYIP), 10 months into my investment. Things have been going well so far but my antenna is still up. I suppose many years of playing with HYIPs (and actually running one) made me so. It needs a certain kind of personality to survive the world of HYIPs.

The HYIP I am investing with now has dropped its previous payment processor (which allowed us to directly send our investment by bank telegraphic transfer) and started using BitCoins. To me, this signals an attempt to avoid anti-money laundering efforts. Previous HYIPs used e-gold to avoid anti-money laundering scanning by financial institutions, which created tons of problems then as hackers attacked the e-gold accounts and removed the gold.

BitCoin, however, has physical wallets, which is actually a 2FA system where you cannot hack and access the BTC (acronym for BitCoin) without physically controlling the dongle as well. And unlike e-gold, which is basically backed by what the e-gold processor claims is the amount of gold they have (can you trust their word?), BitCoins, being cryptocurrency, requires a blockchain system to authenticate and hence you can be sure you are getting the “real” thing (as real as virtual currencies like BitCoins can be, anyway).

And all currencies, even though like gold and silver, are essentially backed by faith, trust and demand in the currency. When a nation does not value the currency (as the British found out when they tried to use gold to trade with the Chinese, who used the silver standard, back before the Opium Wars), they are essentially worthless.

The HYIP I am with is still being backed by a network of Introducing Brokers, which trades in their local currency (SGD, for me), which makes me believe it is still going to last for a long, long time.

For more information on making 8% a month with an investment of only USD1300, feel free to Contact Sensei Michael.

The Business of Risk Management

Just applied to withdraw another USD200 for this monthly payout. Unlike some of my fellow investors, who aggressively market this product to gain from the binary payout option (investors also gain from the payouts of those below them, in a form of MLM), my insistence on telling my prospects of the risks involved in this product (and the nature of investment products) mean that my leverage has not been as good as those who roped in tons of downlines.

I am fine with that, but am also frustrated at how many of my fellow men could not see the importance of a salary hedge, could not see how the risk of losing the USD1300 is actually less than the risk of not investment (it is a mindset issue), and could not see how an investment product, while different from a health product, is still a viable product after all.

Risk management itself is an important part of modern financial prudence. Why do we pay to buy insurance, in the hope that we do not need to use it? The concept of risk management comes into play here. We can risk the SGD200+ we pay every month to cover our family, so that a sudden medical bill of SGD200,000 does not wipe out everything we have. The insurance company gains from the fact that, when pooled together, the probability of having to pay out a certain amount is acceptable enough for the money they gain from the premiums paid (which is used in investing in the money market, stock market and other instruments). The insurance company’s financial capabilities meant that they can afford to pay out a sudden SGD200,000 and gains from providing the risk management service to us.

Many readers may not be aware, but even casinos run on the same theory of risk management. A casino has the financial capability to lose a large amount of money at one go (someone struck a jackpot) and to gain from providing a service of giving a thrill to those who wants to strike that jackpot. The gambler, on the other hand, finds losing a couple of hundreds or thousands acceptable in order to derive their fun from playing for stakes, for a chance to win big. Obviously, the issue comes from gamblers who go on margin (borrows heavily in a way he cannot afford) in order to stay in the game. The issue of gamblers is also the reason why I want to be upfront with prospect when it comes to discussing my present investment.

Risk management is an important part of our financial life. Are we practising it?

Sensei Michael can be contacted if readers are interested to find out more about the investment product he is currently involved with.

Getting Back all the Money, Risk vs Returns in Mathematics

With this latest payout from the FOREX HYIP, I have already taken back all my money in USD terms (more than USD1300) although in SGD terms I still have to get one more payout to have taken back my investment (due to the IB’s spread of 1.6 vs 1.4 currently for the USD/SGD pair). For something I started 8 months ago, this is pretty solid returns.

In statistics, we study probability and understand the concept of mathematical equivalence. We understand the concept that a 100% chance of getting $10 is the same as a 50% chance of getting $20, mathematically. However, in the real world, any sane person will take the 100% chance of $10. As such, in the real world, probability in itself has a value, and all games of chance (investments are also games of chance, as are businesses we run, except that the latter we believe we can influence somehow with our steering of the business) add that value to the investment.

Because of this value of probability, all investments share one common trend, which all investors have to take note all – risk vs rewards. There is a correspondence between risk and between reward. People buy lotteries despite the much worse than 1:1 odds (an investment of $1 on a 45-number lottery for a 2 million prize is at best a 1:2932.2216 odds) because the amount of risk they take is extremely low for the perceived reward. People run away from investment schemes that require an investment of several to hundreds of thousands in dollars for an uncertain return (perhaps 1:10 odds of several millions), because of the amount of risk they take if they lose that amount of money, in return for the perceived reward.

There is a reason why the rich gets richer, and the poor gets poorer. The rich simply can afford to take risks that the poor cannot take.

For more information on the FOREX investment I am taking on now, feel free to Contact Sensei Michael!

Leverage Cuts Both Ways

I met up recently with a lady who was interested in my 8.52% per month investment scheme. She wanted to find ways to quickly reduce her debt, which made me advise her not to come in to the investment scheme because of its high risk.

I found out she had incurred the debt burning her fingers doing FOREX futures. It was nothing new to me. Too many of us have been burnt with leverage. Leverage is like a knife – it can enable you to cut something well, but if used carelessly, you cut yourself. And if used criminally, it can kill someone.

Unlike spot trading, where you immediately pay on the spot and hold on to the actual security (stocks, in the case of the stock market, or currency, in the case of the FOREX market), futures itself is a promise to pay in the future at an amount agreed upon now. Since there is no floor or ceiling either way, you can get burnt for more than the capital available, unlike spot trading. Futures really, should be used by those who are truly interested in locking their rates, rather than the speculative use many futures traders use them for.

And whether spot trading or futures trading, everything is compounded by margin being used. All margin contracts I know of is biased towards the lender, and the margin trader has to make good whatever losses, even if it is more than the capital available.

We should never enter into contracts where we can lose more than the capital we put up. It is a very dangerous way to ruin our financial lives.