If you are active on social networking sites like Facebook and Line, you’ve probably received messages from people claiming to be stockbrokers or investment managers and are encouraging you to try online trading with a promise of high returns and minimal risk. You might even have chanced upon several online advertisements about a one-day seminar where you can learn how to trade on the forex market so that you can make money 24/7 with minimal effort.
Such get-rich-quick schemes are becoming more prevalent in Singapore, and sadly, many unsuspecting individuals are falling prey to them. From 40 complaints involving losses from unregulated online trading platforms in 2016, the number of reports rose to 142 in 2017, according to the Commercial Affairs Department (CAD) of the Singapore Police Force and the Monetary Authority of Singapore (MAS). In fact, combined financial losses of the complainants in 2017 amounted to nearly SGD 8 million? That is an average of SGD 56,000 lost per person. Losing that much money is no joke.
If you want to learn more about the most prevalent investment scams in Singapore and how you can protect yourself from losing your hard-earned dollars, read on. This short guide will arm you with the basic information necessary to prevent the same financial tragedy from happening to you.
What Are the Most Common Get-Rich-Quick Schemes in Singapore and How Do You Recognise Them?
Singaporeans dream of financial independence. Many want to travel the world and live a lavish lifestyle in their retirement years. Perhaps this is why many are enticed by sales pitches that promise quick money. Knowing the most popular investment scams and the ways to spot them is one good way of preventing yourself from being taken for a ride.
Forex Trading Seminars
If you were to google “get-rich-quick forex scams Singapore” you would immediately discover that one of the most prevailing schemes today is foreign exchange trading seminars. Scammers who are pretending to be forex “gurus” invite people to attend a free event where attendees can supposedly learn the tricks in forex trading so that they can earn extra cash effortlessly.
Red Flags to Look Out for:
- Unbelievable promises. The marketing emails or online ads for the seminar guarantee incredible gains, like learning sure-fire forex trading skills that ensure high profits with minimal or no fee at all. Keep in mind that if something is too good to be true, it probably is.
- Hidden costs. If you attend the free seminar—since you are under the impression that you have nothing to lose—watch out for the catch. More often than not, the free event is just a preview to build your expectations. The meat of the seminar will come later, and they come with a hefty cost.
- Success stories. The organizers will sell you the idea that their methods are foolproof by showing testimonies of people who allegedly become wealthy and successful after attending their seminars.
Online Forex Trading
Another get-rich-quick scheme is online forex trading wherein operators of unregulated online trading platforms attract investors to transact with them supposedly to experience unusually high profits with practically no financial risks. The majority of these online platforms are based overseas, making it harder for people to verify their legitimacy and to pursue claims after the fact.
Red Flags to Look Out for:
- Assurance of high returns. The operators of unlicensed platforms will dangle the prospect of wealth by guaranteeing that you have everything to gain and nothing to lose with forex. This guarantee is a straight-up lie since the forex market is unstable and brings substantial risks.
- Unusual request. The scammers will instruct you to transfer funds to overseas bank accounts with the promise of incredible earnings.
- Unknown operator. You will find it challenging to conduct a background check since there is hardly any online information about the firm or the operator enticing you to invest.
Operators of unlicensed online trading platforms also offer another investment scheme that promises quick returns, namely binary options. A binary option is a financial product wherein transacting parties place bets on whether a stock, commodity or any underlying asset will be above or below a certain price on a specific date and time. The winning bet wins a predetermined amount, but the losing trades lose 100 per cent of capital.
Red Flags to Look Out for:
- Unbelievable marketing gimmick. Unregulated online trading platforms offer impossible promises in their ads and emails. Be wary of catchphrases like, “trade with zero risks”, “invest as little as S$1”, or “investment returns of as much as 500% per trade”.
- Unknown financial entity. As with online forex trading scams, you’ll usually barely find information about the online trading platform offering binary options if you look them up on the web.
How Can You Protect Yourself from Get-Rich-Quick Scams?
Apart from knowing more about investment scams and their warning signs, you should also develop certain habits that will help you stay away from fraudsters. Here are several tips to avoid becoming a victim of get-rich-quick schemes:
- Be realistic. If you receive an invitation to attend seminars that claim to teach a foolproof formula to make easy money in exchange for a hefty fee or investment opportunities that promise high returns with minimal effort, do not believe them. Keep in mind that there is no guaranteed way to earn high profits with practically no risks. If there is, why would they tell you?
- Ask questions. When you hear about an investment opportunity, especially from people you hardly know, always consider the possibility that it is a scam. Ask as many questions as possible to fully understand how the investment works, including how the person who sought you out will make money. If the individual or company cannot answer your questions and keep circling back to their sales pitch, walk away.
- Assess the situation. Listening to success stories can be inviting. However, before you get too excited, it is best to assess your situation. Do you understand what the investment is all about? If you invest your money and lose everything, can you handle it? Looking at the downside will give you a reality check.
- Seek professional advice. Do not allow anybody to pressure you into making a decision without thinking it through. If you are seriously considering an investment opportunity, ask an independent professional for advice to ascertain if the investment is right for you.
- Verify. Ensure that the entities providing the seminars and investment products are legitimate by conducting a quick background check on the company, its owners, directors, and members. Verify the information you acquired using various resources, like MAS’ Financial Institutions Directory, Register of Representatives, and Investor Alert List. If the entities are unregistered and unregulated, stay away and lodge a report to the police.
Building wealth takes time, effort, and sensible financial planning. Unless you win the TOTO, it is almost impossible to achieve financial success overnight. Instead of looking for a shortcut that can lead to even greater disaster, you should work hard, spend prudently, and invest your funds wisely.