Mr. Tee had a friend who introduced an attractive investment scheme to him. The friend, whom he trusted, told him to invest in a gold bar. It promised to pay 2% interest every 3 months. After 12 months, the company promised to buy back the gold bar at its full value. This allowed him to earn a return of 8% for 12 months. There is also a certificate for him to take out the gold bar from a trusted third party if the company did not honour the buy back promise.
At the end of the period, the company did not buy back the investment. Mr. Tee took out the gold bar and found that he had paid for the gold bar at a price that is 50% higher than the real value of the gold. He was not aware that the price, quoted in $ per gram, was much higher than the price in USD per ounce that was quoted in the world market.
Fortunately for Mr. Tee, the value of the gold had appreciated, so he did was somewhat compensated. But, he could have made a larger gain by investing in gold directly, rather than investing in this scam. The friend who sold the investment to him was honest and did not realise the scam. She had also invested her own money and found out later about the scam.
There are many investment scams of this kind. They distract the investor with some gimmick, such as an attractive yield and a buy-back scheme. There is usually a catch that the investor was not aware of.
At the end of the period, the company did not buy back the investment. Mr. Tee took out the gold bar and found that he had paid for the gold bar at a price that is 50% higher than the real value of the gold. He was not aware that the price, quoted in $ per gram, was much higher than the price in USD per ounce that was quoted in the world market.
Fortunately for Mr. Tee, the value of the gold had appreciated, so he did was somewhat compensated. But, he could have made a larger gain by investing in gold directly, rather than investing in this scam. The friend who sold the investment to him was honest and did not realise the scam. She had also invested her own money and found out later about the scam.
There are many investment scams of this kind. They distract the investor with some gimmick, such as an attractive yield and a buy-back scheme. There is usually a catch that the investor was not aware of.
7 comments:
Why TKL keeps on posting articles on dubious investment schemes that naive people keep being sucked into.
You need two hands to clamp, and both hands are influenced by greed,
on both sides to work the magic.
Guess blog readers are getting pissed off by now.
Is it possible to publish which company it is and what scheme the person has bought? I think that would be more helpful for the rest of us.
How about buying Gold from UOB?
Thanks.
Reply to yuyuan. I keep getting questions from the public on this type of investments. Many people are still not aware of these scams and need to be reminded. (Old timers like you may have read them before, but do consider the new comers also).
Many people like Anonymous (18 Sept 12.13pm) wants to be told directly how to solve his problem. It's like ask to be given a fish but you never want to learn how to fish. You will still be cheated one day. Many people in Spore have the same attitude and it is why TKL must repeat his warning from time to time. This also answered Yujuan's question.
Recently the papers also reported many middle aged ladies invested their life savings in a gold scam for good returns...that is until the mastermind ran away with the money.
It is good to highlight still that if the investment sounds too good to be true, it probably is.
Mr. Tan, Keep up the good work. I believe many of us are still not aware of these scams.
My own observation is for ordinary folks, it is better to get investment products from the banks (but avoid all structured products)
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