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Thursday, June 1, 2023

Keep calm and avoid scams

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Sei Grospe
Sei Grospe is a former IT Professional. He is a licensed financial advisor and licensed Certified Investment Advisor. He is currently handling 40 people under his management with more than 100 clients.

Have you ever received a message from a close friend or someone you trust to invest in something so attractive and you can’t say no?

Who doesn’t want a high level of return for very low risk to none? This is what we call the “get-rich-quick schemes” and the reason why thousands of Filipinos are losing their money to different investment scams every year.

The problem with “get-rich-quick schemes” is that you’re easily influenced by your friends because they appear legit and they have proofs of returns to back up their claims. “Everyone is doing it so it must be legit” catchphrase is evident on this one.

Today, let me share with you four easy ways to protect your hard-earned money from shady investment schemes.

So Good to be True

If it sounds and looks too good to be true, it probably is. If they offer you “guaranteed” profits with unrealistic numbers, then run away from it.

The legitimate investment vehicle will never guarantee a profit. It is unusual for a bond fund, a fixed-income instrument that pays an interest rate to debtholders, to give an interest rate above 5%. Stocks can give you high returns but the risk involved is very high too. 

“If you are looking for a shortcut to building wealth, you have the wrong spirit. It’s built gradually, layer upon layer.” 

Always remember that investments are never guaranteed. The more risk you take, the higher the potential of your returns. 

Comes with Fast Returns

Who wouldn’t want to join after hearing this mouth-watering spiels from someone, right?

“More than 50% return in just 2 weeks!”

“100% guaranteed return with no risk factor.”

“No need to request payout, the money will automatically transfer to your account.”

If you are promised with guaranteed returns in a short period of time, you are definitely dealing with a scam. Earn more than 50% annual return will make Warren Buffet calling you and trying to learn the secrets from you. 

Asking for Recruitment

A legitimate investment instrument will not ask you to sign up a few of your friends for you to get paid. If you think about it, why do you need to “recruit” people to earn? This kind of setup will go on and on until the music stops and everything collapses. This my friend is a Ponzi Scheme that we know. They trick people, and then they take the money and run.

“A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for early investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers.” -Investopedia

Investing for me must be passive. You park your money and let it grow automatically knowing the risk of a loss. 

Make Sure to Investigate

Make sure to take some time to investigate the company, how the investment work. Do not invest in something you do not know.

The last option you can do to check if an investment vehicle is legit or not is to check the government body that regulates them. The Securities and Exchange Commission (SEC) is the one responsible for protecting investors from all shady practices. All corporations, partnerships, or associations are required by law to be registered first with the SEC.

If someone offers you an investment opportunity, their company must be listed on the SEC’s website. 

There are no shortcuts to building wealth. Financial responsibility is the only way to create and accumulate wealth. It is about building your wealth over time, not overnight. Don’t let greed in money lure you into scams. Investigate before you invest and remember the keywords below.

SO GOOD TO BE TRUE
COMES WITH FAST RETURNS
ASKING FOR RECRUITMENT
MAKE SURE TO INVESTIGATE

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