Don't be greedy and stupid at the same time

Bank Negara today placed a full page ad in Star newspaper, warning the public about illegal investment schemes.  Such scams have been very rampant lately and many victims lost large amount of money.  This is mainly due to the lethal combination of greed and stupidity. 

Yes, greed is good but combined with stupidity, it will lead to financial ruin.

How to detect if an investment "scheme" is fraudulent? The tell tale signs include:

1. Promise of high interest over a short period of time.  This is very common for gold investment, which promises 10% return per month plus you get to keep the "real" gold bar.

2. Buy back promise, usually over next 3 to 5 years.  By then, the conman would have retired happily with your hard earned money.

3. You are given an interest in the property.  That is exactly what you get - an interest and not the property itself.  The certificate given to you is not the title of the property.  It is just printed on fancy paper, with no monetary value or legality whatsoever.

4. The return you are getting is from your own money.  Examples of such "scheme" usually involved investment in real businesses such as oil palm plantation, sea weeds, crabs farming etc (in fact, in can be any type of business). The "scheme" promises a fixed return of, say, 10% per year for next few years.  Thereafter, the return will be dependent on the market price / yield of the business.  If you invest RM100,000, the promoter will keep RM60,000 (10% per year for 6 years) with a Trustee, who will pay you promptly the 10% return every year. That RM60,000 is actually your own money.  What will happen on the 7th year onwards? Guess.

Be wise and invest prudently.  Before you invest, visit Bank Negara and Securities Commission websites on updates of illegal investment schemes.  Caveat emptor.