By Joachim Ng
Some Ipohites may remember that their city was once noted for gold mining. Not gold from the ground but gold investment promising 100% net yield annually. However, the only investors who got rich were the pioneers. The rest saw their money washed away like the sand.
A week before Chinese New Year, two elderly women died in a crush to get free meal coupons. The tragedy is a harbinger of bad times for aging folks whose money runs out. An economic downturn is the ideal climate for mushrooming of “quick money” schemes that promise you a fortuitous cash flow. You invest $2500 and get $250 dividend every month!
Note that the investment is in US dollars. This sounds grand but it also means that your fistful of dollars could have already gone overseas. The investment product may be tangible like gold or financial like currency exchange. It’s just a facade. Chances are high that you will be entangled in a “quick money” scheme because it is founded on trust. You trust your own family member, relative, old schoolmate, or workplace colleague who recruits you. In turn you recruit your social connections — getting an overriding commission, of course. They trust you too.
The cash you deposit as an investment pays the dividends of your upline — all the way up. Even if you remain a passive investor, many others will be tempted by the commission earnings to become active recruiters. But at some point in time, the plug is pulled and all the water (shui: prosperity) flows out. The reasons given for closure are usually that the authorities have received complaints from dissatisfied investors. This cleverly puts the blame on the investors themselves.
“Quick money” schemes are a financial cancer that leads to massive bleeding of the national economy. The lost money is irrecoverable, as it has gone overseas. The Ministry of Finance needs to be fast in shutting down these schemes within their first year. It should also inform the public that if a genius could double his money in a year through real market activity, that genius doesn’t need you to invest in his scheme. His start-up capital of $10,000 would grow to become $1 million in less than eight years.
However, many small-timers prefer risking their life savings in “quick money” schemes because financial institutions are giving them measly yields that are only slightly better than the inflation rate for essential consumables. Some financial products come with hefty sales charges, putting you into negative zone for a long time.