ALL THAT GLITTERS - JSE MAGAZINE

ALL THAT GLITTERS

The old adage of disbelieving any claim that offers quick, easy returns has never been truer

ALL THAT GLITTERS

Do you fancy escaping the rat race, the politics, the news headlines and SA’s stuttering economy, to live among green orchards situated between the foothills of a mountain range and a famed river? For a payment of just R350 000 you can live this dream. In addition, within four years you will be earning a monthly income from those very same orchards.

Sound tempting? Admit it. Probably yes. Does this sound too good to be true? Most certainly yes. Yet judging from the Facebook feed, there are many, many South Africans who have taken a step in and requested further information. They are neither the elite nor the poverty stricken; they are not ill educated nor highly qualified; and they are neither corrupt nor paragons of virtue. They are ordinary South Africans who are frustrated with what they see happening on the social, economic and political stage but don’t have the luxury of a foreign passport or job offer.

Their fear and frustration is exactly the emotion scammers are playing on. Yet perhaps you are suspicious of property syndication schemes. After all, the heartbreak and financial devastation caused by schemes such as Sharemax, Masterbond, Supreme Holdings and Jack Milne’s PSC Guaranteed Growth Fund have been well documented.

However, before you pat yourself on the back and say that no-one will ever con you, ask yourself whether you just might consider a risky investment if it looks good on paper, if your friends are involved, if the returns seem to outweigh the risks, if money is a bit tight and school fees are due. Would you take the chance?

Alternatively, perhaps you are a bit of a risk taker, upwardly mobile and tech savvy? If so then maybe you find yourself drawn to forex trading or bitcoin investments. I’m not suggesting that either of these is inherently dodgy but a quick social media search will throw up a multitude of opportunities presented by gorgeous young people bragging about their wealth and promising a quick and easy ride to fortune. One ‘opportunity’ even suggests that by renting a bitcoin you get to participate in the upside without losing on the downside. Really?

Of course there are many unusual and perfectly legitimate investments in the world. However, where there is money (or lack thereof), there is emotion (fear and greed) – and a wily con artist trying to get in on the action.

Regulators such as the FSCA are constantly warning the public about new scams doing the rounds. But for every scam they investigate, another five pop up and people continue falling for them – hook, line and sinker.

I recently listened as the noted economist Iraj Abedian addressed Grade 12 learners at the Lawhill Maritime Centre in Simon’s Town. It was their final prize giving and instead of enlightening them with details about the new Finance Minister, the shenanigans at VBS Mutual or even his own journey from Iran to SA and to the top of his profession, his message to them was simple… As you progress through life, always strive for excellence; maintain a strong moral compass; be humble (there is always something more to learn); and be patient (nothing comes quickly and easily). These are the most valuable lessons he has learned along the way, and if you stick to them, he says, success is inevitable.

These lessons can be applied to all of us. Many of us are too impatient and too confident in our own ability. Social scientists call this confidence the ‘illusion of invulnerability’ – the belief that we are too smart to ever fall for a con. Yet everyone – irrespective of age, education, race, or gender – has the potential to be scammed, given the right circumstances.

So when someone offers you prime +7.5% (that’s 17.5%) – as recently happened to me – yet their website gives no indication of how that return is generated and the company is not regulated, it’s a good idea to stay far away.

By Sasha Planting
Image: Haleema Rawoot