Are you using money to make more money?..a story of gold investment

September 26, 2012 13:16 PM

‘Risking’ Money To Get More Money?

By Zulkiple Ibrahim

“Using money to make more money”. That is the bottom line capitalised by operators of quick-get-rich schemes.KUALA LUMPUR, Sept 26 (Bernama) —

“I can make more money from investing in gold,” a friend told this writer here recently. “Really? Gold is an expensive commodity and you need a large amount of funds for such investments,” came the reply from this writer. The friend said he had invested RM30,000 to buy gold bullion and is assured of receiving RM 600 a month by the company that offers the scheme. “You can get much more in monthly dividends, if you make a bigger investment,” added the friend. That got the writer to begin thinking about the gold investment. At RM600 a month, the investor will receive RM7,200 in dividends for the 12 months in one year and he still has the amount of RM30,000 that he had pumped into the scheme as the principal investment. The amount is for one year. If it is for five years, the investor will get a total of RM36,000 in monthly dividends apart from the RM 30, 000 in principal investment.Sounds too good to be true, doesn’t it?


“Your friend could be taking a huge risk,” said consumer activist Gurmukh Singh when told by this writer about the investment scheme. “There are several aspects an investor should look into before venturing into such schemes,” he advised. “First, check and look into the background of the company. Yes, the company may be in legitimate existence but does it have a licence to operate such a business?” “That business involves soliciting and receiving funds from the public,” Gurmukh added.  According to Gurmukh, only banks and certain entities are allowed by the central bank, Bank Negara, to receive cash from the public.”When dealing with gold bullion, I think only banks have the licence to do so,” he says.


According to news reports, hundreds of people nationwide have been cheated off their money by companies offering them gold as a form of investment. In one of the media reports, a victim claims that she was offered handsome monthly dividends for an investment in gold. The victim was also offered a gold bar in order to test the authenticity of the gold. Satisfied with the authenticity of the gold, the investor splashed out a large sum of money for the investment. Thinking of the bigger dividends that she could get from the investment, she borrowed huge sums of money from relatives and friends to add to her principal investment. She also borrowed from the ‘Ah Long’ (loan sharks) in her desire to earn higher dividends.For the first month, she received her dividends on time. The payments were slightly delayed in the second month but she still received what was due. However, for the third month, the monthly dividends failed to appear in her bank account. When she went to the company to enquire about her money, she found that the premises had been vacated and the company had simply vanished. All of her invested money had also disappeared.


What is a get-rich-quick scheme?

According to investment authorities, a get-rich-quick scheme is a plan to acquire high rates of return for a small investment. The term ‘get rich quick’ has been used to describe shady investments since the early 1900s. Most of these schemes promise that the participants can obtain high rate of return with little risk, and with little skills, effort, or time. Some of these get-rich-quick schemes often assert that wealth can be obtained by working from home. According to experts, it is possible to get rich quickly if one is prepared to accept very high levels of risk – which is the basis of the gambling industry. However, gambling offers the near-certainty of completely losing the original stake over the long term, even if it offers regular wins along the way. “Just like buying a lottery ticket, chances of winning are very slim but people spend lots of money buying the tickets over a long period,” says Gurmukh.


Gurmukh says that people are attracted to promises of making money fast because just about everyone wants to get rich quickly and they let themselves believe that it is possible. “And the people who create these packages and opportunities know that all they have to do is make outrageous promises of wealth and there will always be plenty of unsuspecting victims willing to invest their hard earned money.” “The people who fall for these get-rich-quick schemes have no idea they are jumping into something that is bound to leave them broke. “They are blinded by thoughts of making incredible amounts of money in a short time,” he adds.– BERNAMA

Posted by Alex Wong CPA Australia Melbourne University, Australia

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