High Investment Funds: Why All the Secrecy?

By Mark Grant

It is exceedingly difficult to get 'straight' answers about high interest generating online investment funds. Here were talking about funds which normally earn between 3 to 12% - monthly. That's 'monthly', not yearly, like the banks pay us.
The challenge is this: if a guy deposits $1,000 in a fund that only earns 4.5% monthly, then in 12 years, with monthly compounding, his fund has grown to about 4 million dollars. Keep in mind that this payout rate - of 4.5% - is really a very average one. This of course is a relatively small amount. You can be sure that funds like this will have many members, often numbering in the tens to hundreds of thousands. When one looks at the larger picture, it seems like this kind of thing cannot go on forever.
So, the obvious question is, is this kind of growth sustainable, and if so, for how long? I have found that most fund managers are extremely reluctant to answer such questions. Surely, some of them don't want to answer the question because they are scammers, planning at some point down the road to take the money and run. But are there any 'good' reasons why 'good' [that is, honest] fund managers might be reluctant to offer answers to such direct questions? I would say yes, and here is my reasoning.

Let us suppose that Mr. Jones, manager of Fund X, which has 50,000 members. Fund X has faithfully been earning 8% a month for 2 years, during which time it has made payments to any member requesting a partial or whole withdrawal. Mr. Jones receives an email asking if this kind of 8%/mo. growth can go on forever, and if not, what do you plan to do? Jones declines to reply, or simply says something like - "that's too far down the line to discuss at this time" - a very common kind of answer.

Why such vagueness? Can there be any legitimate reason why the "good" M. Jones is not answering my question? Doesn't he owe me a decent response? After all, I dropped some of my own hard-earned money into his fund!

The only 'good' reason why he might not answer has to do with investment jitters - and this is a biggie.

Jones, (to whom I am basically just a unsername/email address) is most likely afraid that if he tells me too much information, that I might spread it out all over the Internet, on message boards, web sites and so on. The likely net result? A mass exodus of members. Furthermore, I might misinterpret what he said, and broadcast wrong information. In this case, the ensuing exodus would have occurred for 'all the wrong reasons'. In both of these cases, I can see Mr. Jones' point of view, and respect it.

Therefore, I suppose, we must all expect to encounter such vagueness on this topic down the road, as we watch our investments grow over time. While this does seem likely, in the course of my research I have piece together various tidbits of information which I believe, when added together, provide a generic template which describes the life cycle of these kinds of funds in general terms.

My research suggests that all of many of these funds go through two very common phases, both of which are essential to understand - if you are looking at these kinds of funds as true 'investment' vehicles. Once understood, I do believe that the average investor will have far greater cause to feel confident and comfortable about this sensitive matter...

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Article Source: http://EzineArticles.com/?expert=Mark_Grant

Published at Jun, 22 '06 ; read 384 times;

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