Many Filipinos are encouraged to start investing in banks through mutual funds, Variable Universal Life (VUL) insurance, and Unit Investment Trust Funds (UITFs) to be able to grow their money in the next few years. Others are enticed to invest in money-making schemes that promise to instantly double their money, say, in a span of two weeks. The promise of easy, guaranteed returns seem attractive, but chances are, it’s a scam.
There has been an increasing number of investment scams in the country such as the Ponzi Scam and Pyramiding.
Ponzi Scam is a money-making scheme that promises high interest within a short period of time. It pays members from the cash investment paid by new recruits. Without recruiting new members and soliciting more investments, the scheme will not last any longer.
Pyramiding occurs when scammers offer a certain product to investors and require them to recruit more buyers. Scammers normally pay investors back at first to appear legitimate. Eventually, the “pyramid” collapses when the money paid by the new investors is not enough to cover the payout to earlier investors.
If you’re reading this, you’ve probably become a victim of investment scams before, or if not, you just want to prevent being scammed in the future. To protect yourself from investment scams, here are five things you should do:
1. Don’t trust anyone easily
A scammer is usually a charming, smooth talker who will encourage you to turn your hard-earned money into an investment opportunity. Sometimes, he/she will pretend to be a successful investment manager and representative of a reputable company. When they offer you a high payout in a short period of time, don’t be swayed easily. Take time to understand how the investment works, how it earns, and the risks involved.
2. Don’t believe offers that are “too good to be true”
Is there a person or company claiming that they can double or triple your money in weeks? It’s too good to be true! Even banks and other legitimate financial institutions can never guarantee returns within a short period of time.
In reality, investments are subject to the risk-return principle: “the higher the risk, the higher the reward.” In other words, if you aim for a higher return for your investment, you have to brace yourself for more risks. Don’t be afraid to say no to these kinds of investment offers. Instead, find more investments that will ensure your financial well-being.
3. Do your own research before investing
Fend off scammers by researching the company. Find out whether the company is registered by the Securities and Exchange Commission (SEC)—the government agency responsible for regulating the securities industry in the country. Or you can also check with the PIFA (Philippine Investment Funds Association) if the company is licensed to offer investment products. If you can’t find the company online, it could be a scam.
4. Report suspicious activities to authorities
When in doubt, report suspicious investment schemes to the SEC. There’s no such thing as being too careful, especially when your hard-earned money is at stake.
5. Invest wisely
There’s no such thing as an overnight success especially when it comes to investing. It will take time, discipline and patience. If you want to thrive as an investor, manage your finances wisely and remain vigilant of fraudulent schemes around you so you can attain a safe and secure investment journey.
To stop investment scams, it is not just enough to know how we can avoid being a victim to them. We must also play a proactive role by reporting criminals to the authorities.
You may report suspicious investment schemes to:
I. Enforcement and Investor Protection Department of the Securities and Exchange Commission
II. NBI Anti-Fraud Division
III. PNP Anti-Cybercrime Group (ACG)
