Con Succeeds When There Is GREED

The poor are haggling over the difference between 10 sen and 20 sen of price increase while the rich are haggling over the difference between 1% and 2% of investment return. The poor are helpless because they have no money while the rich are seeking ways to make more money.

There is a scene in Hong Kong movie Life Without Principle that shows Denise Ho, who plays a bank customer manager, persuaded housewife Soh Hang-suen to invest the BRIC fund with a greater return. Ho kept explaining the investment risk to Soh, and Soh constantly repeated that she was clear about the risk.

The plot reflects the money game played in a capitalist society. To earn commissions, the bank officer instigated customers to make high-risk investments while the housewife gave up stable fixed deposit to pursue for high returns. As a result, she lost all her hard-earned money.

Gold trading
The recent controversial raid on the Genneva Malaysia Sdn Bhd offices has exposed human nature, just like a movie plot.

There are many people with extra money in the country and the 3.5% bank annual interest rate has failed to meet their desire to make more money. Therefore, many legal and illegal investment plans have emerged in recent years and Bank Negara has revealed the blacklisted 87 investment companies last month to alert consumers.

Illegal investment plans have taken away much wealth, such as the seaweed plantation project in Sabah, coffee chain stores and crab breeding project. The Companies Commission of Malaysia (SSM) also brought to light that a total of 196 illegal investment plans in the market had tried to search for their prey last year.

Investors were fooled as they have neglected two points, namely the investment protection and the rationality of the investment return.

Any companies involved in investment and interest activities must first obtain a permit from Bank Negara. Banks can guarantee the safety of deposits because they are backed by Bank Negara and a deposit insurance mechanism, while the general investment companies have no protection for investment.

Secondly, if the monthly investment return is 2%, it would be 24% for a year. How could the investment companies earn so much money? The higher the investment return amount, the more it is suspicious. Take the seaweed plantation project as an example, the return would be three times the capital after six months with a monthly interest of 7% for 30 years. Even the world’s best investor would not be able to do it.

An investment company might be able to pay the investment returns in the beginning, but once there is a cash flow problem, it might fall into arrears and when investors lose confidence, the company will collapse. Lucky those who get their money and leave in the beginning and pity those who lose even their capital in the end.

Asset bubble
It is what we called a capitalist society. It maximises the profits and thus, various funds emerge, including hedge funds. Fund managers keep speculating futures, commodities, gold and foreign currencies in the market to meet investors’ expectation of high returns, as a return, the fund managers get their rewards.

The money game has led to various asset bubbles. When the bubbles burst, investors suffer great losses and the worst is, the poor will have to bear the economic turmoil resulted from the collapsed asset prices.

Life is short. How can we feel peace and happy if we have to worry so much about losing money everyday?

Money game is always followed by risks. Do investors really understand it?