So ... Is this a good idea to subscribe to a tontine or not? I described in detail how a Tontine because you need to understand how each investment works prior to subscribe. I told you then quoted the 6 benefits from my point of view, what you get by subscribing to a Tontine . You are ready to consider this investment, you have researched online and asked for advice around you. But wait five minutes before signing, that I set out the 9 good reasons not to subscribe to the Tontine.
1. Your capital is not available The money you put on a Tontine, do not expect to see the color before a good twenty years. The liquidity of the Tontine is extremely low. In cases of hardship, you can not recover your money before maturity. Possibly a loan can be done at a rate to be determined. But even if a loan, ensuring competition both for finding the most advantageous loan. A partial redemption in connection with life insurance is much less restrictive example. The Tontine is an investment in the longer term life insurance, you can leave whenever you want.
2. Your performance is known that at the end of Tontine
Pendan the 20 years since your last Tontine, you will have no information on the current performance of your investment. Have you done a good or bad choice? Should you continue investing in this investment or not? Impossible to know. Only six months after the end of the Tontine, when all assets have been sold, you will know if your investment was a good investment or not. If you are naturally anxious, this investment is probably not for you.
3. The returns shown do anything exceptional
course display today in a yield of 6.85% over 20 years for The Tontine Group is accurate and Conservative seller. But we must compare what is comparable. You can not compare performance with a 20-year yield over a year. You can not compare this performance with Performance in 2009 Livret A or life insurance in euros. Especially since the book A and life insurance of euro risk-free, which is not the case with Tontine. Risk must be paid, it is normal that the Tontine earns you more. If you look at the results of previous Tontines, The Conservative group shows such a yield of 2.84% for the Tontine of 1990, less than life insurance in euros without risk. Some competitors have even Tontines losses.
4. Your performance depends on your age
more you are older and the rate of return that will be served will be high. In other words, if you are under 40, you have no interest to subscribe to a Tontine. The Tontine is interesting if you want to prepare for retirement, transfer assets, or escape to the ISF. It is best to have more than 40 years, but you can not purchase if you are over 70 years. So do not expect to get rich with Tontine if you live a hundred years.
5. You do not know what assets your money is invested
Over the last 20 years that your Tontine, you will not know how you back your investment each year, but you do not know what your money is invested. You just know that Over time it becomes less and less invested in shares and more on secure assets. This opacity may be embarrassing. For example if the toxic assets have been purchased as part of your investment, you will not know. If your investments included Tontine Madoff example. Unsure on what assets you have invested through your Tontine, you could invest twice on the same values without knowing it, as part of your overall investments. You increase your risk as you want them lower.
6. You have no action on the management of your investment
You can not leave before the deadline and you do not know what media your money is invested: you can not intervene in any way whatsoever in the management of your investment. The management is fully controlled by the association. This turns out to be an advantage if you feel they have neither the time nor the expertise to manage your investments. From my perspective, if you want a higher yield secured an investment, it pays off to invest a little time to learn to manage your own investments.
7. Heavy penalties for failure to pay
If you stop your payments during the first two years you lose your rights to the earnings distribution. Your contributions and earnings are then distributed among other members. But as costs for the 20 years are pre-numbered, in fact almost all is lost in fees and does not return to members. If you do not pay for 20 years are agreed, you are penalized two years of contributions. Can you be sure that for 20 years you will not encounter any financial problem and that you will not be forced to suspend payment?
8. With the loss of life, you lose your capital
more you're older and your performance will be high to reflect the fact that you have a higher probability of not seeing the end of the Tontine. Indeed, the basic means of Tontine in case of death the money that you should return either distributed among the last survivors of the Tontine. You can protect yourself against this risk by purchasing insurance death benefit amount of your payments will be bequeathed to your heirs. But in this case, your yield will be lower. Published performance figures do not reflect this additional cost. And in case of death, only the money invested is recovered, not earnings, which are divided between members the Tontine. Do you want to sign a contract that speculates on the death of other members?
9. The bad reputation
If you search for Tontine internet, you will quickly find the testimony of members who speak scam and lost money. Internet malcontents expressed more often that people feel satisfied, but given the lack of information provided by Tontine (yields in accession, media in which your money is invested, the return of ...), experience gain more weight when choosing. If you read too many comments from people disappointed, perceived risk is too high and unacceptable.
Like any investment, the Tontine has its advantages and disadvantages. In the case of the Tontine, these advantages or disadvantages are often strong and specific. On the investment side, you can pay less TFR, else do you want to invest without any visibility for 20 years in an investment that penalizes you as much in case of problems with payment? Personally, the characteristics of the Tontine does not match my financial goals and I think for the time being too young to get an attractive return. And you, what do you think of this product?
What feedback do you know about the Tontine ? Have you purchased for yourself? If not for what (s) reason (s) have you given up? What other information would you like to know about this product?
Credit: Photogail
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