Why people get into ‘Get Rich Schemes’?

September 27, 2012 11:23 AM

Greed Factor In Get-Rich-Quick Scams

Many people may get too excited about getting rich quick. The crucial driving force is greed where people can be blinded by promises of lucrative returns on investments. However, these handsome returns, in the end turn out to be fake but by then it is already too late.

By Zulkiple Ibrahim

KUALA LUMPUR, Sept 27 (Bernama) — “When investing your hard-earned money, please be extra careful,” advised a journalist friend recently. He said that ‘get-rich-quick’ schemes promise high returns but the returns are too good to be true and the schemes are most likely to be financial scams. These schemes are frequently promoted through approach as well as through the Internet and SMS as the more common platforms.  “Before subscribing to such schemes, please check with the professionals and authorities whether such investment opportunities are genuine or otherwise,” he adds.

BIG MONEY RETURNS

People do not really know when such schemes began in the country. It actually began with ‘tontine’ before developing into other attractive big money scams. Tontine, which is popular among housewives, neighbours and office colleagues is an investment plan for raising money. A subscriber deposits an agreed sum into the revolving fund, and thereafter receives a lump sum of money when his or her turn arrives. The risk is when the ‘collector’ absconds with the money. Based on news reports in the late 1970s and early 1980s, Malaysians were under the impression that they can make fast money by investing in the commodities futures market. Some of the commodities such as soya bean and sugar were traded in foreign bursaries.

Many companies encouraging Malaysians with news on making big money but failing to inform the investors of the potential risks involved while trading in such markets. Unfortunately many Malaysian investors got their money ‘burnt’ when the market ‘crashed’. Reports were lodged with authorities and a startling discovery was made that many of these firms were actually ‘fly by night’ companies out to fleece unsuspecting investors off their money.

This form of scams later took up the guise of ‘foreign exchange’ or ‘forex’. Gullible Malaysians were told that they can earn big money by trading in foreign currencies in markets overseas but they were not told that the risks involved were huge. Reverse market trends resulted in many of these investors losing their money overnight. However, many of these firms were actually bogus firms pretending to be trading partners of principal financial companies based in off-shore territories like Hong Kong and Singapore.

After action and clampdown by the authorities, these bogus forex companies resorted to another ploy. This time, it was trading in the Hang Seng index based in Hong Kong.

Currently, many Malaysians are hooked onto the idea of investing in gold, hoping to receive handsome monthly dividends apart from being promised of retaining their principal investment.

EXERCISE CARE

“Even if the investment offer is being introduced or recommended by someone you know very well or a family member, always be mindful of the intention behind the offer. Simply, no investment is easy and can make you lots of money quickly,” says lecturer Abdul Aziz (not his full name). Abdul Aziz is among those Malaysians who have been badly hit by the so-called trading in foreign currencies. “These so-called investment firms only say the good things and refrain from Giving information on the huge risks involved. Their intention is simply to get the clients’ money and they never allow the clients to withdraw their investments.”

“Whenever a client wants to withdraw his money, the firm will try to convince the client otherwise,” Abdul Aziz says when investing’. He advises people to be suspicious, particularly of an investment that offers high returns and very low risks. “Actually there is no easy way to make money, no shortcut to riches,” he adds.

FAST MONEY

A get-rich-quick scheme promises that participants can make money fast with basically no skills and efforts in a very short period of time. These schemes, which come under many guises offer unlimited profits through various easy-money opportunities, but those who are actually making fast money are people operating the scams. In truth, knowledge and hard work are required to make money. Members of the public should not allow anyone to convince them that there is a system that can roll in fast cash easily. According to Abdul Aziz, if these systems really worked, then everyone using them would be rich. The thought of getting easy money may be appealing, but success generally requires hard work. Unfortunately, many people get too excited about fake get-rich-quick schemes. Their driving force is greed and all warning signs are neglected. “Do not be fooled and look at potential opportunities and read between the lines.

“Ask questions like what is the intention of people operating the get-rich-quick scheme? Are their intentions really honest? What are they out to gain?” he adds. — BERNAMA

Posted by Alex Wong CPA Australia Melbourne University, Australia

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