Safeguard Your Investment

Almost daily, you hear of heartbreaking news of someone being swindled of their life’s savings. Giant companies that parents have relied on for the tuition of their children have failed to deliver. Rich and famous people too have fallen for fraudulent investment schemes. Nobody, it seems, is immune to the siren call of the con artists or unreliable establishments promising riches or a secure future.

Why are so many people enticed into making fatal financial decisions? The foremost reason is greed coupled with ignorance. Hopefully by reading some of the more common money risks listed below, the knowledge you gain will be able to improve your chances of safeguarding your investment.

• Abnormally high interest rates. With today’s rock bottom low interest rates in banks, many are tempted to put their hard earned cash in those who offer the highest interest rates. Unfortunately, the higher the interest rates the higher the risks you will lose your money. If you cannot resist then, at least, check if the bank is insured with the PDIC and if the amount you are putting in will be within the amount of the insurance coverage. Still, use caution in this strategy especially if the cash deposited may be needed in short notice. It may take awhile to recover from the PDIC if the bank goes under.

• Pyramid schemes. This racket is when you are made to invest money to gain the right to recruit other investors who are in turn induced to recruit the next batch of investors in a never-ending pyramid. Where the income is based on recruitment and not on the product or service being sold, then it is a pyramid scheme. Unfortunately, it is not easy for many people to differentiate a legitimate Multi level company from a pyramid scheme. Usually you are told to get in quickly since the company is just starting in this country and so you can easily recruit “downlines” that will make you money while you sleep!

• Other get rich quick business opportunities. Nowadays, one of the most common get rich quick schemes are some fly-by-night franchises. If a franchise is too cheap then it may be little more than a ploy to sell you their equipment and supplies. Just think if it were that easy to be rich, then why is not everybody rich?

• Incredibly good deals. When something seems too good to be true, it probably is a scam! There are many types of fraudulent deals offered, from the fantastic like the treasure of Yamashita to the more common bargain property deals. Besides checking it out in the relevant register of deeds, seek a reputable and licensed real estate brokers professional’s help in verifying a properties ownership since there are many fake titles. Typically, these kinds of deals have a short time limit to pressure you to close the transaction without thinking.

• High risk investments. Properly done, mutual funds, stock market investments, and foreign exchange trading may make money, especially for those who know what they are doing and can afford to lose their investment. We usually hear a lot of people brag about how they made it big in these types of investments but those who were wiped out rarely want to talk about it. However, many people enter these transactions not knowing there is a possibility that they can lose a big deal of their money very rapidly!

• Pre-need Plans. Most preneed companies are not scams. However, for several reasons, in the past several years, some of the largest pre-need companies were unable to fulfill their obligations to their plan holders. The resulting lost of confidence has reduced the industry to a shadow of its former self. I believe that the industry and our regulatory authorities have learned many lessons from the debacle and hopefully there will be less such disasters. Despite this, I would advise that you have a fallback position in case history repeats itself.

There are many more schemes existing and being hatched than can be listed above.

Nevertheless, what has been discussed should infuse you with a healthy dose of caution. Perhaps this may suffice to make you take the time to think through more carefully where you will put your hard earned money.

*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.