Sunday, 7 May 2017
Read? Better safe than sorry: Resist urge to invest in too-good-to-be-true schemes
... Such investment scams are usually managed by people who hold meetings in posh offices and hotels, which boosts their public image and lend credence to their products.
Some investments appear to provide some form of insurance, which investors wrongly believed could protect their capital.
Many of these investors then invited family members and friends to participate, partly because there are commissions to be earned when they refer fresh candidates and partly because they truly believed the schemes were bona fide.
Real People. Real Losses
CW8888: Oilpods scam; one ex-colleage's spouse, siblings and close relatives all die together!
One 55-year-old investor who put almost $40,000 into an oil bunkering scheme, expecting 15 per cent monthly returns over eight months, recalled how stressful the experience had been for her. In her case, her nightmare began after receiving just two payouts.
When the payouts dried up, dark thoughts consumed her mind and she went through an emotional roller coaster with feelings of anger, rage and depression, and countless sleepless nights. She also despaired as it was a friend who had referred her to the scheme.
She was subsequently diagnosed with Stage 2 breast cancer. After surgery and six weeks of radiotherapy, she counted herself fortunate that her condition has stabilised and she is on a five-year anti-hormonal pills regime.
INVESTING WITH MONEY YOU CAN AFFORD TO LOSE
A 45-year-old investor borrowed $400,000 from a credit line as the principal sum for her investment in a scheme. When the scheme collapsed, the monthly interest portion of the debt was a staggering $8,000, which devastated her.
Another took a loan from his 25-year endowment insurance plan to fund an investment. If he had not taken the loan against the policy, the potential maturity proceeds would have been about $100,000 when it matured last year.
Instead, his maturity proceeds were just $20,000. This means that the premiums he had saved in his insurance policy for the past 25 years had gone down the drain.
ONCE BITTEN BUT NOT TWICE SHY
The adage "once bitten twice shy" does not hold true for some retail investors. One medical doctor admitted to me that he had lost his money twice to schemes that turned out to be run in a Ponzi-like manner.
In a Ponzi scheme, people are enticed into investing by the promise of high returns. The returns, however, are paid out of funds from new investors entering the scheme. It all goes swimmingly until the flow of funds dries up when the operator is unable to get enough new investors to pay off the older ones, and he flees with the money.
Another investor in her 60s had parked more than $500,000 in binary options but has not been able to withdraw any returns nor her capital.
To make matters worse, she lost more money when she tried to retrieve her money through an overseas agency that claimed to have helped other binary option investors trapped like her.
Real People. Real Losses
CW8888: Time-sharing scam; one ex-colleage lost money his money. One agency stepped in and called for a meeting for investors to put up $5K each and collectively the agency would have enough fund to fight the case and retrieve some lost money.
The Agency subsequently also disappeared.
Beware! There are scammers looking for a kill and scavengers looking for your dead bodies too.
In her bid to recover her retirement savings, she had responded to an individual who claimed to work for an international police agency who linked her up with a hacker.
She forked out $10,000 on the hacking software but nothing has materialised. In addition, she is considering legal help from the US but has been told to pay a high initial fee.
BACK TO BASICS
A former classmate has been encouraging me to sign up for an overseas-based scheme where so-called professional traders will deal in blue-chip US stocks on my behalf. It is not regulated by the Monetary Authority of Singapore.
The initial investment sum is US$10,000 (S$14,035) and my friend claimed the trades have made him richer by achieving about 7 per cent monthly net returns.
He also earns commissions by referring investors to the scheme; his parents and siblings have joined.
Why it can happen to retail investors?
Fear of losing OUT is the Greed that is even more fearful!
Until they have close friends or relatives whom they can trust to be financially savvy and competent to seek for alternative views before investing. Many more sad cases will continue to happen!
You may read; but it may NOT hit your heart hard enough to truly understand it!