Recently, there was a report that there was a Ponzi Scheme in Australia which many investors suffered large loses.
The company was alleged to have got investors to invest in property development. But this turn out to be a scam.
A Ponzi scheme is actually a scam where investors are paid an income or a return using money from new investors. Most of these investors were from Singapore. 900 over individuals were from Singapore. 600 plus from Malaysia and a small amount from other parts of the world. Not only were the majority of the investors from Singapore but many were also retirees.
Why are retirees attracted to scam?
One reason is because retirees tend to have more money so they are more willing to invest. As they have more money, they tend to be targeted by Ponzi scammers.
The second reason is because many retirees are looking for income. They want more passive income so that they can spent more. Perhaps they do not have sufficient passive income in the first place. They are not happy with the fixed deposit, annuity and stock return and hence they tend to gravitate towards high returns scam.
The third reason is because many of these Ponzi scheme use appealing instruments to scam their investors. Usually property or gold is used as an underlying investment. Of course, they do not invest in property or gold and that is why it is a Ponzi scheme. Property and gold tend to be very appealing to certain group of investors especially the older generation. The older generation tends to gravitate towards property and gold.
As a financial practitioner, I will always advise my clients to make sure that the portfolio is diversified. Do not put all eggs in one instrument
My second advice is to buy only from regulated products. So it could be a stock that is listed in a recognized, reputable stock exchange or it could be a unit trust that is purchased from a regulated financial adviser or an annuity or CPF Life which is of course regulated. I am not saying that unregulated always equals to scam and neither am I saying that if investment in regulated it will yield good returns. But if you invest in regulated products as a retail investor through a financial adviser, you have certain recourse under the Financial Advisers Act. No such recourse is available to you if you invest in unregulated products.
For those who are much younger, my advice to you is make sure you start retirement planning early and do not wait until the end because if you wait until you are 60 or 70, you are going to have this problem of not being able to make your money work harder. You will be attracted to this kind of dangerous schemes like scams due to the pressure of insufficient retirement assets. Another thing that I always like to advise my clients is to be realistic in the kind of returns you will get.
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