A Chinese educated investor met me today. She was led to invest in two financial  products by a bank relationship manager on the promise that it was capital guaranteed and had the potential of a good return. After three years, she lost 40% on the investment and found that it was not capital guaranteed. The investor said that she was not aware about the product, as it was in English.

I found out that she had invested in two real estate unit trusts. I was surprised that these two investments lost 40% of the value during the past three years, when the global real estate and stock markets had recovered from the downturn.

I suspect that the investment banks that created the two real estate funds could have put in bad assets at inflated values – which accounted for the large loss. This is an example of the risks of …