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Investment Scams – How Can You Safely Avoid?

Investment Scams, is it common in today's environment?

How do we avoid investment scams during this COVID-19 pandemic when everybody is desperate to make more money?

With this COVID-19 pandemic creating havoc in everyone's life and businesses,

  • most people are affected badly,
  • some even lost their earning power,
  • some are short of financial resources and desperate to find ways to increase their income.

What people will do in desperate situation?

  • Some people are looking at ways to earn a living,
  • or improve their income,
  • others will think of investing in some financial instrument,
  • they hope this will be the way to go and earn more income.

Why do people invest?

With the bank interest rate at all time low, people will believe putting their money in the bank will not give a good return.

Human being by its nature, will always look for high return on investment.

Hence we will tend to look at investment instrument to boost up our returns and make more money.

Therefor in the eagerness to go after high returns on investment, people tend to forget the basic rules of investment.

The saying of Too Good To Be True especially those schemes which promised return of investment of more than 10% per month.

Some reports of the Investment scams and their methods

In the News published by The Straits Times of Singapore on 3rd April 2021,  under the heading - Promised Big Returns, Only To Leave Many High And Dry.

The Straits Times reported that a total of 15,756 scams in 2020,  and one of the scams involved cryptocurrency trading platform.

There are quite a few such platforms in Singapore.

MAS - The Central Bank of Singapore, more commonly known as Monetary Authority Of Singapore, does not regulated some of the platforms of cryotocurrency.

Even the Prime Minister of Singapore also said in his Facebook page that some platforms used his profile, see the link .

You can see those scammers will take whatever actions and tricks they can, in order to get people to invest in their platform.

Every day, we can read about people being scammed, and with internet now more popular, and easily accessible in everywhere, it is even easier for scammers to take advantage of human greed and cash in on this.

How do we detect and learn how to spot investment scams?

You may want to consider the following points:

1. Risk Factor

Every investment carries risk, and if someone tells you, what they offer do not have risk or very low risk, go back to the basic motto of investing -- Too Good To Be True.

What do you need to do when you come across such a plan?

  • With internet and other resources, if one come across such an investment plan,
  • do carry out your due diligence and research,
  • especially for those investments plan, which claim to offer very good return with low or no risk.
  • If this is being offered online,
  • you can not even meet up with the promoter of the plan.

it is advisable to just drop this plan.

2. Prove of track records

When someone promote their investment to you, and claimed they can generate good and high returns,

Please carry out the following steps to check

  • do ask them to show documentary proof,
  • that they themselves have used the same plan,
  • and generated so much profit,
  • Meanwhile to make sure the proof being shown are statement from a Trading House or Bank,
  • which showed the promoter account with the transactions,
  • if the promoter of the investment plan is not willing to provide such a proof of track records,
  • hence, it is advisable to walk away from such investment plan.

3. Regulatory Framework

For any investment scheme, we need to ask the following questions:

  • Is the scheme is approved and monitored by the Center Bank of the country?
  • where the investment plan is originated, are there any chances the scheme is a scam?
  • even if it is not a scam, can the investors get back their money?
  • Moreover, Is the investment money protected?
  • What happen in the event the investment go south and fail to generated the returns as promised?

4. Guaranteed Returns and Investment

If the investment plan promised guaranteed return and investment amount is protected, all the more we need to carry out a thorough due diligence.

  • Check with the relevant authority of the authenticity of the plan,
  • Who are the people behind the plan,
  • Are they on the white list or not.

5. Influence Tactics

Some plan will always tell you the offer is expiring in one or two days,  if you do not take advantage of it, you will lose a lucrative return or discounts being offered, which on the surface of it, look like a good bargain if you invest now and can get an even higher return than promised.

This tactic is to take advantage of human perception that scarce opportunity is a good item, and should take advantage of it.

6. Referral Scheme.

Some investments scheme offer referral scheme, that is, if you bring in certain investors, the platform will reward you some monetary rewards, or certain percentage of the invested amount of the investors you bring in to the plan or scheme.

It is quite unusual for any scheme to offer commission to investors who bring in investors to the scheme, if it is a legitimate scheme, all they need to do is to just publish a prospectus and let those who are interested to invest in, no need to incur additional cost for the plan.

7. What Are Available For Investor To Verify.

In Singapore, one can always go to Monetary Authority of Singapore (MAS) website to check on the validity of the investor plan, and if it is an oversea plan, they always search on the net with website like the SEC alert list such as .

1. https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-alerts/investment-0

2. https://www.usa.gov/scams-and-frauds

These are just some issues about investors scam which we should be aware of.

You only live once, thus, it is important that we do not waste our life savings to scammers, in our eagerness to generate more returns on our investment.

Investment scams

To understand more on what we can do to detect fraud and scams, perhaps you want to learn HERE

if you have any ideas or wish to share your experience, do share it below in the comments section below.

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