Multi-Level Marketing-Legal and Ethical Concerns?


Multi-Level Marketing (MLM) is a system of marketing that has been around for some time. Also known as Network Marketing, it is a method of distributing products that involves little or no mass advertising. Instead, marketing of the product is spread by word of mouth of its users.

Of course, word-of-mouth marketing is around even longer than MLMs, so what makes it different? Unlike traditional word-of-mouth marketing, the users who spread the word for the company, and gets others to buy the products, gets a commission for doing so. The person who spreads the word is called the Sponsor or Upline, while the person whom he sponsors is called his Downline.

To make the deal even sweeter, the company gives the Sponsor a commission for products the Downline of his Downline buys! Many companies allow each Sponsor a network up to 6 levels deep. Hence the name for this style of marketing – Multi-Level Marketing or Network Marketing.

Legal Concerns

Legally speaking, MLMs have been legal in Singapore since June 2000, when the government finally recognised it as a method of product distribution, rather than a Pyramid Scheme. The U.S. government (the land where MLMs first originated with a company called Amway) has slapped a whole list of conditions on an MLM system to set it apart from Pyramid Schemes.

Ethical Concerns

To me, many MLMs toe a very thin line to Pyramid Schemes. The problem does not lie with the marketing system (which actually represents a very cheap method of product distribution for the parent company). Rather, it lies with the people who promote the products. In some cases, the way the system is run by the company also makes it a form of legalised Pyramid Scheme (if there is such a thing).

Why do I say that the problem lies with the people who promote the products? The problem is with the fact that it is promoted as a means to get rich. Its promoters want the downlines at all costs – it means more money for them. In order to get the downlines, they push the ‘business model’ and use hype and emotional draws to appeal to those who are looking for more income.

More often than not, the products are very expensive and marketable only to certain segments of the population (e.g. health products). In addition, many who are drawn to such MLMs are actually not prepared for the kind of sacrifices and time required for the business to work. It can take as long as 1-2 years, and thousands of dollars in expenditure before a profit can be turned in. These are the ‘hidden’ stuff that many promoters did not mention, in their push for more people in their downline (and hence greater wealth for them).

Another practice many companies have (that makes for high dropout rates) is that of a ‘maintenance’. Each month, their distributors must buy a certain amount of their product to keep their downlines. With increasing expenditure and of both money and time (especially time) and sometimes alienation from friends and family (due to overzealous promoting of the products to get a downline), the distributor gives up – and all their work goes down the drain.

The final point that personally bugs me is the fact that the promoters always harp on the fact that MLM is a sure-win business model. They insist that everybody can succeed in having the MLM as a business, to attain financial freedom.

Let me put it across very plainly. Is it possible for everybody to earn money from MLM? In order for a person to earn money from MLM, you need a critical mass of downlines (as little as 256 persons or as many as 1024, if not more). Mathematically, it is a folly to assume that there is no bottom of such a pyramid network. For those near the bottom, where are their critical masses coming from?

Ultimately, there must be somebody who is taking money from outside of the MLM structure, and pumping it into the network of sponsors above. Now, I have no problem with that. There might be those who buys the products without taking it as a business (also known in network marketing circles as ‘consumers’). I was one of them (my money comes from outside of the MLM structure). However, to push MLM as a business where everybody can make money is simply unethical.


I personally do not have an anti-MLM pose (I used to be a consumer, but not an active MLM business leader). To me, it represents a distribution system that takes away the wealth from the big boys (the advertisers, the warehousing systems, the transport systems, etc) and put it in the consumers themselves. For those who went in early and helped the company market their products, their income will increase.

For those who come in later, however, it is a different story. My desire, for those who read this article, is to warn against the hype and emotional traps that comes from a desire to get rich quick. I also hope (against hope, perhaps) that those promoters who have been pushing that mathematically-impossible model will at least tell the truth to their potential downlines.

I welcome all feedback on this article. Till then, may you find health and wealth in your endeavours.

Investment History


I began multiplying my money since 1993. Somebody once asked me why I am not rich by now, with all my investment successes. I have only three answers to that.

  • Until a fateful day in 2002, I did not have good personal monetary management. Whatever money I earned, I buy luxury goods instead of reinvesting them. Well, that one fateful day in was a Saturday of July 2002 (can’t remember which day!), I bought a book called Rich Dad, Poor Dad by Mr Robert Kiyosaki. I am forever indebted to him for pointing out why I am not rich. I have since changed my spending patterns.
  • Since when have you encountered a rich civil servant? I have been one ever since leaving high school in 1987. Only after leaving the teaching service in 2002, did I really put my heart into financial matters.
  • A rich person gets rich because he has learnt to allow his gifts to be used for many people. I only invested with my own money for myself. No wonder I am not rich. Talents are meant to be shared and used to bless others. In starting the HYIP, I hope to be able to bless others as well.

Investment History

  • My first investment in 1991 was a total disaster. I was young and totally ignorant of financial instruments. Upon the urging of a good friend of mine, I placed some $7,000 into commodities trading. I left the trading to the hands of the broker and lost all the money. It was only later that I learnt the significance of the term churning, an underhanded method whereby the broker kept trading even if you are losing, in order to earn your commissions. This was the beginning of my decision to learn about financial instruments.
  • I started studying seriously about stocks in 1993. It was also the year I began putting money into the SGX. I still remember some of the stocks I used to trade in – Vikay Industrial, Pertama, Heshe Holdings and SingTel. There were probably more, but I really could not remember. The bull run was moving crazily in the SGX during the year of 1994, and I decided to liquidate all my money in Sep 1994. I had a 173% profit, and sat relieved when the Oct 1994 crash brought curses and painful cries to many who lost their money believing that bull runs never end. I never re-entered the SGX since then, although I am still watching and planning my move even right now. Patience is important in trading and investing. Warren Buffett waited 20 years before making some of his moves.
  • The property market in Singapore was also heating up in 1994, together with the SGX bull run. The resulting crash only stopped the move of the property market, but did not bring it down, surprisingly. I bought a 1BR apartment in a good part of town for $54,000 in 1995. I managed to sell it in 1996 for $97,000 (79.6% profit). The property market began its move downwards in 1996, with anti-speculation measures set by the government.
  • In 1996, I bought a 3BR apartment for $124,000. Everybody wanted big apartment in those days, as they supposedly had greater resale value. My choice of apartment size was sneered as being silly by many who knew I could afford a bigger apartment. The market began its long-awaited correction in 1996, wiping huge amounts off the bigger units. I sold it in 2003 for $293,000 (136% profit) in a time when many were burnt trying to sell off bigger units bought at high prices. Right now, I am renting an apartment to stay in. Rents are at an all-time low, and I am waiting for my next move in the property market. Patience and control over greed is important in trading and investing.
  • As of the writing of this article, my money is invested in my Music company and stock options.


By now, you would have known what makes my investments successful (and in the case of 1991, unsuccessful). I will put them all down below, and trust that you will learn something from my successes and mistakes!

  • Knowledge is Power. It is also Money in the world of financial instruments.
  • Patience is important to make sure you maximise gains and minimise losses.
  • Control over greed will help you make wiser decisions.

Finally (and most importantly, I feel…but you are free to disagree), having an intuition for the various moves of the markets. This I dare not take the credit, but all honour and glory goes to God for being my Master, and for giving me the calling of a Steward.

How Much Do You Really Need To Retire?


How much do we really need to retire? There are four factors involved here.

  • The amount of capital invested into the retirement fund.
  • The rate of capital growth.
  • The amount of time for the compounding to work.
  • The amount of income generated for retirement once the capital is established.

We shall go through a few case studies here. I trust they will help you understand the need to start early, and to choose the correct vehicle for growth.

Fixed Deposit Instruments (aka Certificate of Deposit)

These are our assumptions.

  • $200 invested in this instrument each month. I believe this is a reasonable amount to set aside each month for our retirement.
  • Interest rate at average of 3% per annum (0.25% per month). This is not impossible. Here in Singapore, we had FD rates of 6% before, but currently we are at a super-low of 1.25%. Over our assumption of 30 years required for capital growth, 3% should be reasonable.
  • Retirement in 30 years after the investment plan.
  • This part is tricky. The fluctuations in interest rates can really destroy your retirement objectives. But let us assume that there is an economic depression akin to what we are experiencing now at the time of retirement, resulting in current interest rates at 1.25% per annum (0.104% per month). Tell you what, let us try this even at a good 6% per annum (0.5% per month).

This results in final capital of $116,547.38 with an investment of $72,000. Unfortunately, the retirement withdrawal each month is only $121.21. This is barely even subsistence living! The CPF Board itself allows a withdrawal of $300. To me, FD instruments represent the most ridiculous planning for retirement. Even assuming 6% per annum, we are talking about $582.74 a month. If you want to retire on that living standard, I really have nothing to say.

Stock Market Instruments

Many insurance plans use this instrument as well. Money Market instruments have performances slightly less than equity markets, but it is similar enough not to matter. The average investor would use Mutual Funds run by professional fund managers instead of investing on their own. Personally, I believe with good financial education, the personal investor can do better than the professional fund managers. This is due to something called the Institutional Imperative.

  • $200 invested in this instrument each month. I believe this is a reasonable amount to set aside each month for our retirement.
  • Stock market average performance of 8% per annum (0.67% per month). This has been historically proven accurate when you talk about a time frame of 30 years. Shorter time frames give wide fluctuations. The shorter it is, the wider the fluctuations – even negative growth is possible!
  • Retirement in 30 years after the investment plan.
  • With stable companies like utilities and food, yearly dividends should average out to 6% (0.5% per month). Companies with business cycles can vary from no dividends to huge 12% or more dividends. Let us assume 6%, otherwise, we can write about it forever!

This results in a final capital of $300,503.50 with an investment of $72,000. The retirement withdrawal each month is $1,502.52. This is considered pretty good for someone who supposedly has no major financial commitments. I beg to differ, however – a major illness in the family can wipe out a big portion of the nest egg. Also, I believe after working for our children and our parents, our retirement is meant to be enjoyed. I personally would find it difficult to enjoy retirement on $1,502.52.

Private Investment Fund

I used to run a private investment fund, yielding much better returns. The better returns is due to the use of derivatives to secure leverage over the underlying stock. And since I buy the underlying stock as collateral as well, I am pretty much covered in case the market moves against me. I have since then closed the fund.

  • $200 invested in this instrument each month. I believe this is a reasonable amount to set aside each month for our retirement.
  • My investments net me conservatively 2% per month (24% per annum uncompounded) on my money.
  • Retirement in 15 years after the investment plan (yes, I can retire that fast!).
  • Continued investment at 2% per month (24% per annum uncompounded).

This results in a final capital of $343,208.31 on an investment of $36,000. The retirement withdrawal is $6,864.17. Now I can definitely live comfortably and well off on that amount!


My most sincere hope is that you will think deeply about the amount of money you will need to fund your retirement. Most of us do not spend enough time thinking about it, and find ourselves not able to have a good retirement when we can no longer earn the kind of pay we used to have.

Right now, after my previous failure, I’m building up my portfolio of clients again. If you would like me to manage your money for you, please do contact me.

High Yield Investment Products


The term High Yield Investment Products (HYIP) is used to indicate non-traditional investment products promising much higher returns than traditional ones like stocks, bonds and real estate (I don’t really consider Fixed Deposits or CDs as investments).

HYIP normally derive their profits from FOREX, futures, options, arbitrage and real estate flipping. These are areas where the tremendous leverage gives rise to possibilities of high returns.

With the proliferation of the internet as a medium of advertising, communication and business, many HYIP sites have sprung up. The returns are incredible – some promising 5% daily! Compare this to a bank deposit returns of 5% annually and you can see their attraction.

The Sleazy World of HYIP

Unfortunately, the world of HYIPs is laced with scams. The anonymous and global nature of the internet has made it easy for anyone to simply set up a web site and fleece unsuspecting people who are buying into hopes of riches or financial freedom. One HYIP expert I know of puts this scam rate at 95%. In other words, you have to kiss 19 toads before you find your prince.

Many HYIPs are a play on the old Ponzi and Pyramid schemes. As long as they are paying out, people get excited and invite friends and relatives to put in more money. The power of Word-of-Mouth marketing is the strongest in the world, and should not be underestimated. If the HYIP operator can get money coming in faster than the money they pay out, the program will continue to earn big bucks for them as they take in the percentage. In fact, even those who came in early will also benefit, some tremendously. All these add to the emotional hype surrounding the HYIP.

However, once the money flow can no longer be sustained due to the operation of mathematical laws, they simply fold and move on. The losers (those who come in later, attracted by the hype and emotional draws) are left to lick their wounds.

Investing in HYIP?

Interestingly, if the scam rate is 95%, it means that there is a 5% out there with real programs that are paying out money regularly, for a long time. How then, do we invest in HYIPs without killing ourselves? I offer this 5-point system for investing in HYIPs.

1. Aim for cashflow rather than compounding. HYIPs come and go, and the winning attitude to adopt should be guerrilla tactics rather than taking the ground and slugging it out. Take out the money as much as possible, as soon as possible, until you have recouped your investment – the rest are then free money for you.

2. Go small. Put in not more than USD100 at one time. In fact, there are those who espouse even USD10, if the programmes do not have minimum spends (investment). Spread out your investment over many programmes, and expect many of them to fail. This expectation will make it easier on you emotionally.

3. Check out the website. It should be on its own domain (not a free domain) and should look professional. Try and look for those with a forum so that you can check out how well the admin responds to those they serve. Check out the operators and managers of the programmes (also called the admin). They should be easily contacted. A proper e-mail (not free e-mails like Hotmail) should be available and the response should be quick.

4. Be wary of HYIPs that uses referral programmes to induce people to join. Experience has indicated that referral programmes are a big warning sign for ‘Ponzi’! Be wary also of HYIPs that promises more than 20% per month. Such programmes are extremely difficult to sustain.

5. Programmes that have been in existence for longer than a year are normally good programmes to join. They are also extremely rare though. It is easy to check how long the website has been operation by checking out However, you must be aware that a website can be registered first before it is operational. Few scamsters are going to wait that long though.


I trust that the information presented in this page has been useful to you. You may want to contact me if you have further questions.

Financial Instruments in Life

Ways to Money

There are several financial instruments in life to get ahead. Each has its own characteristics, advantages and disadvantages. Understanding the materials in this article will help you to do well financially in life.


Being an employee of someone definitely has its advantages. A fixed and sure salary each month, medical and other benefits make a career worth pursuing. Also, a large corporation offers good advancement opportunities and benefits.

To ensure you do well in a career, you must always cultivate good relationships and a strong network and be prepared to keep learning new things. You may need to switch employers (to move from an SME to an MNC, for example) over the years as you develop your career.

Unfortunately, a career is at the mercy of not only the economy, but also your employers. The dangerous time comes normally when you are in middle-management, when your pay is high and yet redundancy most easily resolved with downsizing (when companies merge or the economy is poor). The years when you are in middle-management also tends to be the years when your expenses are high.


The risks in doing a business are great. Statistics indicate that 90% of all businesses fail within the first 5 years due to marketing and cashflow problems. In the next 5 years, another 90% of the remaining businesses will also fail because of cashflow and also because the founder has moved his passion to other things in his life.

Moreover, most if not all businesses have business cycles. Business cycles are natural movements of businesses due to supply and demand. A severe recession can put many businesses into cashflow difficulties and force them to close down.

For a business to really move on to big things, contacts and funds are needed. A person generally cannot start up a big company until some of the big boys are helping. These big boys may come in the form of banks, Venture Capitalists (known as VCs) and angel investors (people who give money for personal fulfilment or who doesn’t mind losing the money).

Unlike a salaried employee, a businessman must be prepared to put in long hours and much effort in running the business at the beginning. He also must be prepared to take losses and money out of his own pocket to finance the business while it is still in its infancy. Business turn out a cashflow at about 18 months on the average, so the businessman must have savings or low expenses to tide out that period of time.

However, once a business system has been set in place and employees trained (and moved or hired to management), the businessman generally finds himself with time to start up another business or branch. The business will more or less sustain itself, with minimal supervision, if the management is good.

Most of the rich (and that means really filthy rich) people on this planet became rich through businesses. The rest are rich because they are royalty or heirs – something the average person cannot really do anything about.

Stock Investments

When a company wants to expand, or the founders want to cash in on their company, they normally offer part of the company for sale. Shares of the company stocks are then created. For many companies, these stocks are traded publicly on a stock exchange, where members of the public can easily purchase them.

Some investment houses also create mutual funds where a manager buys shares and manage the investments on behalf of the members of the public who places their money with them. Shares in these mutual funds can also be traded easily.

The major newspapers (or internet) will publish the price of each stock. The price is normally for a single share in the company. A company may have billions of these shares. An investor will normally simply call up the broker and tells him the number of shares he wants to buy. Some brokerage houses may allow up to 3 days before payment of the shares.

There are two types of stocks generally – growth stocks and income stocks. Growth stocks normally do not pay out part of their earnings to their investors. The only way an investor can gain from them is to wait for their stocks to rise in value and then sell off the stock they own. Most stocks dealing with technology (like Microsoft) are growth stocks.

Income stocks, on the other hand, normally pays out part of their earnings to their investors – either quarterly, semi-annually or annually. These pay-outs are called dividends. Most stocks dealing with food or utilities (like Coca-Cola or SingTel) are income stocks.

The price of a stock is determined by supply and demand. Unfortunately, supply and demand is determined by the human emotions of greed and fear, and can be very unstable, fluctuating from day to day. Good management and business leadership in the company normally makes these fluctuations small and manageable. Occasionally, however, this instability really tips the scale, causing widespread panic or mania. This creates bubbles and crashes that affect the entire stock market.

Real Estate Investments

Everybody needs a place to live or do business in. Some will buy it outright, but there will always be those who does not want to buy. They may be constantly on the move, or may not have the downpayment. The banks may not want to give them a mortgage due to a poor credit history. Or, especially for new business, the long-term stay in the premise may not be certain.

In such cases, there is a market for rental properties. Residential properties are meant for families to live in, while Commercial properties are meant for the conduct of business. Certain areas of the country are preferred (Prime areas) while certain are not so desired (Poor areas). The prices and rentals of the properties reflect that.

Real Estate, however, is considered a heavy investment. The downpayment typically count in the thousands, and a bank normally has to come in to give a loan (called a mortgage) to cover up to 90% of the property price. In addition, the investor has to pay the lawyer’s fees, the broker’s fees (if any), maintenance fees and also property taxes. Maintenance fees and taxes are also collected regularly, as long as the investor owns the property. Also, normally furniture has to be provided for the tenants.

The key to earning a living from real estate investments is to make sure that the rentals can cover the mortgage payments, taxes and maintenance costs. That creates the cashflow for the investment. In addition, over time the investment may appreciate (increase in value) as demand for such properties increase. Of course, if demand decreases, there will be a drop in value.

Just like stock investments, the price of real estate is actually determined by supply and demand. A high demand for certain properties will drive up both its price and its rental, while a low demand will depress its price and rental.

Unlike stocks, however, real estate tends to be more stable. This stability, however, means that it may take much longer to buy or sell real estate. Matching buyers and sellers are not as easy, and it takes time for lawyers to process the necessary documents to transfer the property.

Even with that stability, occasionally the market may experience extreme euphoria or depression, creating real estate market bubbles or crashes.


Everyone of us have unique strengths, weaknesses and comfort levels when using any of the financial instruments to get ahead of life. We would need to assess carefully everything, before we commit ourselves.

Financial Education

My passion is Education. I believe it is the key to a fulfilling life. Education gives knowledge that nurtures relationships. Education gives knowledge to help one understand himself and the world around him. Finally, Education allows one to improve his ability to contribute to his life, and to the world about him.

Many of us leave school with the education to get a job and do it well, but not how to create jobs or even support jobs. That is when Financial Education comes in – we need to learn and understand how the world of money works. If we do not seek to understand, then truly a fool and his gold is easily parted.

Buying a Business

Getting Good Deals is the Key!
I’m sure, at some point, some of us have that itching desire to “be your own boss”. We imagine all the wonderful benefits of calling the shots, deciding the direction of the business, and having heaps of money because of successful businesses.

Some of us then decided to take the natural step and “just do it”. We would then proceed to dip into our savings, borrow money from friends and financial institutions, or perhaps sell some equities we are holding on to. And we merrily register a company and start working! The scenario sounds really familiar!

That was me! I sold off my home to raise capital for my ventures into fund management, music production and education. I registered the company and began working to build something I can call my own.

The thought never occurred to me that one can buy a business, instead of starting from the ground up. But coming to think of it, even if the thought did occur to me, my pride (and cash position?) would not allow me to do so. I want something to call my own!

And that is precisely why many of us will never consider buying a business. A matter of pride. Of course, there are other reasons.

  • Staff Problems: We are inheriting staff that has never worked with us, that has been answering to someone else. Of course, those of us who are newly employed by a company or are posted to a new division also have the same problems. And how do we know we won’t get the same problem with staff we newly recruited?
  • Hidden creditors and debts: This one is a potential trap to watch out for. Experienced business buyers know how to get over this one, like getting the seller to make a Statutory Declaration (which means you can be punished by law for declaring falsely), or co-signing or any number of tricks that a good business broker should be able to help you with.
  • Business Ill-will: Again, another problem. What if many suppliers refuse to work with the company, or many customers would never want to even hear of the name of the company again? Or some influential “terrorist” has been starting a hate campaign because of a faux pas in customer service by a staff in the past? But there again, a good business broker should be able to help you with that, to make sure you don’t walk blindly into a deal!

Why then do people buy businesses instead of starting on a fresh slate? For the same reason how real estate investors can find gems where others cannot. Those who buy businesses are into businesses to earn money. Pride, for them, goes into a corner and is beaten into submission. What matters is the ROI (Returns on Investment).

Look at the real estate investor. When he buys a house for investment purposes, he looks at the possible land uses (to see if the lot use can be changed), the amenities, the general rental of the area, the possible tenant mix and so on.

The business buyer looks at the accounts to check cashflow situations. He wants to see if there are inefficiencies that he can work on to increase the value of the business. He looks at the possible staff interactions to see if he can work on this and increase the value of the business. He examines the goodwill and opportunities to see if it’s possible to do IPO or takeovers/mergers in the future.

In other words, the person who buys businesses tends to be a person who looks for good deals. They are not interested in starting a business to “be a boss”. They can be considered a true professional business investor. They may in fact buy a business which has the same 3 problems mentioned above. Only that they have their ways of overcoming these problems. Their highlighting of the problems to the sellers only makes it easy for them to buy the business at bargain prices.

The reason for this article, of course, is not to influence a person to buy a business. I don’t have the expertise and experience to do that. If you are interested to find out more (and you happen to be in Singapore or Malaysia) you might want to contact Freddy Ngiam. He’s a professional – not only in buying businesses for his own “consumption” but in broking for those interested in buying and selling businesses.