It seems that there is no end to the number of people who are able to set up supposedly legitimate businesses and proceed to use them to relieve the unsuspecting public of their hard-earned cash and increasingly much of their retirement funding.
It appears that we have learnt little from Masterbond, Supreme Bond,Fidentia, Bernie Madoff et al. Now we have another alleged scam in the Frankel Chemical crisis. It also seems that the South African public are as gullible if not more so than our overseas counterparts.
There is one very simple rule in investing money – if it seems too good to be true, then it almost certainly is. When the market is paying around 10-12% and someone tells you that he can give you returns of 15-20%, that is the time to look very deeply into the package you are being offered. It is alleged that the latest debacle of the Frankel Chemical Corporation is yet another elaborate “Ponzi” scam and that it could run into billions of rands.
Recently in KZN, an investment business taking funds from investors for ostensibly investment into private companies also appears to have hit the wall – and hundreds of investors – mainly private individuals as it appears is the case with Frankel – will in all probability lose their money. And all this despite the fact that the Financial Services authorities have apparently been bolstered and certainly legislation has been tightened up.
So what are the lessons for us in small businesses? Well, whilst you will come across the odd brilliant entrepreneur who has spotted a gap in the market and is charging through it making an undivided fortune, for the rest of us, making money equals hard work, long hours, persistence and endurance mixed with the odd stroke of good fortune and a great deal of vigilance!!
So when someone approaches you with one of these “too-good-to-be-true” offers or schemes, your first reaction figuratively should be to button the pocket in which you keep your wallet. And when you do look at opportunities, leave no stone unturned. And when someone resists your efforts to check every detail and every supposed “fact”, then run a mile and carry on protecting your hard earned cash.
The more successful you are in making money, the more you are likely to attract those who may have schemes and ideas which may be less than honest. If it looks too good to be true, then think again!!
It is difficult if not impossible to flout the laws of the market – to consistently produce returns that are 5-10% ahead of what the market is paying is just not a realistic proposition.
Time will tell how much the investors in Frankel will lose – but one thing is certain, they ain’t getting all their money back! And this should set the warning bells ringing in the heads of any local investor with a grain of common sense.
Tags: Finance, financial, Investment, Retirement Planning, scams
