Stop helping investors in shady investments

online-tips-4-investmentBy TK Chua

I read of how yet another investment scheme went awry with a total of 107 people claiming to have lost RM6 million to a company in Penang after investing in a scheme offering returns as high as 40% per month.

Just a couple of weeks ago, there was a report on a forex trading scam where 23,000 investors lost more than RM80 million.

Before this, we heard of investors unable to recover their money from gold investment involving more than a billion ringgit.

From gold, cyber money, exotic stocks to forex dealings, where do Malaysians get the idea that these schemes can actually generate returns of more than 30% per month?

Each time their “ventures” go belly-up, investors run to the authorities crying foul and calling for tough action against the perpetrators. On the other hand, there were also occasions when investors would blame the authorities for throwing a spanner into their lucrative schemes.

If ever I have a say in this, I would prefer that the authorities stay out of it. Let the investors sort this out with those who took their money. They can’t be so careless and gung-ho on one hand and keep running to the government on the other.

I know I will be labelled as heartless and smug for not showing sympathy to investors losing their hard-earned savings.

But why have repeated warnings fallen on deaf ears? Where were the effects of earlier reports on similar scams? Why was nothing learnt from the painful experience of others?

Have we ever wondered if indeed there are such lucrative investment opportunities available, the promoters, their friends and loved ones would have taken it up altogether? Why do they ever have to try so hard selling the schemes to us?

I have an inkling that many investors have indeed gone into various schemes with their eyes wide open. They think they are smarter than others – be the early bird to get in and out of the scheme earlier than others.

Well, a few may be lucky, but eventually most will suffer the fate like those gambling compulsively at casinos.

If we choose to be so greedy and adventurous, why must the authorities help us out each time we get into trouble? Do the police ever help those who lose their fortunes in casinos?

Sometimes it is convenient to argue that some investors are innocent and ignorant. They are tricked into investments they don’t understand. Well, be that as it may, these “innocent” investors are certainly smart enough to know that 30% returns per month are much higher than PNB unit trusts for which others queue up to buy.

I think we have gone through enough of Ponzi and other devious schemes to understand the dangers that abound in financial investments. But they will continue to thrive because many of us have chosen to remain greedy and unthinking.

Seriously, the police are not our grand-uncles. Maybe they can help us by arresting the schemers before they cheat us. But once we have put our money into it, it is as good as gone.

There are certain theories in finance and investment (such as no free lunch and risk-return trade-off) which are as binding as the law of gravity. Don’t ever allow any of the schemers to tell us – “this one is different”.

TK Chua is an FMT reader.

With a firm belief in freedom of expression and without prejudice, FMT tries its best to share reliable content from third parties. Such articles are strictly the writer’s (or organisation’s) personal opinion. FMT does not necessarily endorse the views or opinions given by any third party content provider.