By Joachim Ng
Stop dreaming of riches…you won’t get it in a year. Ipoh is quite a city of fool’s gold. While still renowned for hawker food, it is also getting associated with investment scams. In the 90s, gold was all the talk as scammers with a silver tongue convinced hundreds in old town and new town to put their money in gold and see their money double. Instead, the only thing that doubled was their grey hair.
Gold has gone Down Under and has been replaced by forex, cryptocurrency, oil and gas—and one day, the moon. All you need to do is put up the capital for others to trade and you double your money in a year or less. Wow. A money tree. Brokers go around recruiting investors. Except two ex-brokers early this July went to the Perak MCA public complaints bureau to expose their bosses for scamming.
Investment scams are second only to the jail scam in draining tens of thousands of Malaysians of their savings and throwing families into disarray. All in all, the scam industry rakes in more than RM3 billion a year for the crooks who usually spend the loot overseas to avoid police detection.
While the jail scam feeds on your fear, the investment scam garnishes your greed. Before you hand over your money, probe whether the investment scheme works on multi-level marketing. This is a sure giveaway. A recruiter who approaches you and must be keen that you join because he will earn a handsome commission from your investment.
Having recruited you, he would then persuade you to be his downline. If you succeed in signing up ten others to put in the same amount as you did or more, you have already recouped your investment through the commissions. Your upline earns from your downlines and their downlines too. The scammers at the top of this pyramid will want to see multiple layers of downlines as that is how they become multi-millionaires.
But instead of making a million as promised, you and thousands of others like you may be clustering near the bottom of the pyramid. Three years have passed and the scammers decide to stop operations as the authorities have pushed through the door. Say goodbye to all your sweet dollars.
All this while there is no legitimate trading of any kind, although the scammers and recruiters will tell you the organisation is harvesting massive sums of public money in order to do colossal things and earn you the 100% return on your investment. The fact that it starts paying you a dividend within 30 days is proof that the cash is coming from a multilevel marketing roll. No genuine investment can give you dividends in 30 days.
The next question to ask is whether you get a promise of a 100% return on your investment in a year or less. This is promising you the moon, because the gold standard for any genuine investment is 30% returns annually. The only person who will give you 100% return on your investment is your own dad. Or uncle, maybe.
How do scammers get so many thousands of victims? The well-tested multi level marketing way is to get every sucker to approach his parents and siblings, uncle, auntie, cousin, nephew, brother-in-law, schoolmate, work colleague, and friends. When someone close to you sells you a scheme, you are likely to believe him out of trust.
To get 30% returns or more you have to run a profitable business. As a saver, the highest you can get is 6% from the EPF. All other financial institutions will offer you between 2% to 5% only. You can play the stock market and hope for big capital gains, but even real estate investment trusts have been known to lose 25% of their capital value. Unit trust? You may lose your (golf) balls.
If you are saving for retirement or you are a retiree hoping to survive on dividend yields, there is nowhere to turn. You might readily fall prey to these investment scams out of desperation for good yields.
Why are yields so low? It is because the economic system is designed to facilitate big borrowers taking loans at giveaway rates. These big-time borrowers are favoured over small-time savers to keep industries thriving, and you’re the sacrifice. You have little choice but to lock up your savings in EPF to keep your money safe from the multiplying hordes of scammers baiting you.