I’ve been checking a particular section of the Moneyweb website lately, for no other reason than to keep abreast of potential Investment scams so that we can alert our clients. It seems that even in times of such high regulation, these scams continue to exist and thrive. In the end sometimes billions of Rands are lost, never to be recovered. Leaving many to deal with the aftermath of a personal financial tsunami.
How do they seem to attract people to invest their hard earned cash when at face value you could surely ask, is this too good to be true? The answer is simple; these companies, people, predators prey on a human emotion that more often than not is our own worst enemy – greed.
Here are a few recent scams:
DefenceX / Net Income Solutions – 2% a day (R800 Million taken in deposits)
NaxaInvest – 2% a day, copycat of DefenceX, run by a former DefenceX member
Sharemax – closed down (R2,2 Billion lost)
The latest scam (Zantech Trading) which I found on the Moneyweb website was offering investors a return of 25% a month. That’s a whopping 300% per annum….The interesting part is that the journalist on the website had been inundated with questions from potential investors and existing investors who either wanted to add to their existing investment or were about to invest. Who can resist a return that will triple your money in a year?
What is even more frightening is that Moneyweb had warned readers in February this year to keep away from this company, and only 4 months later did the FSB(Financial Services Board) issue a warning for consumers not to conduct business with this company.
Our advice to our clients:
- Don’t be lured by excessive returns.
- Try read information from reputable websites / publications (Moneyweb, Personal Finance)
- Do your own research on the investment in question.
- If you don’t understand the legal structure or if it seems overly complicated, be wary.
- Understand how the returns are achieved, again if it seems complicated, be wary.
- Check if the product is regulated by the Financial Services Board. This is not an outright guarantee, however it does offer some level of recourse for the investor.
- Keep your investment goals in mind and insure the returns are in line with these goals..
- Control your emotions and try and let common sense prevail.
- If it sounds too good to be true, it generally is.
- Obtain advice from your financial planner at Maximus Wealth Management.
The Moneyweb website has a vast amount of information and is reputable. Please go to: www.moneyweb.co.za/moneyweb-special-investigations