The 4 Worst Investment Rip-Offs in Singapore (2013)

Investments are confusing. It’s not like in the old days, when investing meant pretending you had gold bars hidden in the walls, and then chuckling when grandsons repainted your house “out of love”. These days, investment involves a complex interplay of risks, returns, and time calculations. In other words, the lay investor’s more out of depth than a goldfish in the Sahara. Don’t worry though; you can start by knowing what to avoid:


Hi, welcome to Totally Not a Scam Inc. Let me show you some of our products.


1. Unregulated Gold Trading

Genneva (not a typo) is now the most notorious example of this. But others exist. Here’s how most unregulated gold schemes work:

It starts with an invitation to a free seminar; one with an attention whore of a title. Something like “How to make a million by next year”.

When you attend, you get a pep-talk on the rising value of gold. The speech is usually peppered with buzzwords: “retirement”, “financial freedom”, and “controlling your destiny”. It concludes with a suggestion that you buy a gold bar from them (around $10,000 is a common figure).


GoldGold

Of course it gets sticky and chocolaty in your hand. All, uh, real gold does that.


The traders then promise to pay absurd interest on said gold bar (e.g. 3% compound interest per month), and to buy back the gold bar within a year. At which point, you’re wondering why they’d do that.  Why trade the gold to you for cash, then buy it back at interest?

How about because the gold’s already marked up when they sell it you?

Most are selling you the gold at 10% or 30% above market value. So the minute you buy it, the seller’s already made a huge profit. Some will close down almost immediately afterward, leaving you an overpriced gold bar.


2. Overseas Land Plots


Look on the upside. It’ll be less full of crap than the company that sold it to you.


I’m not talking about overseas property, but overseas land dealers (e.g. land banking, zoning funds). Some of them even use misleading names, calling themselves REITs (Real Estate Investment Trusts) or property developers.They’re about as related to those businesses as Finding Nemo is to marine biology.

This scheme involves selling plots of junk land. Sometimes the land’s described as infill (vacant plots which may have loose zoning laws, depending on the country in question).

See, zoning laws restrict how land plots are used. With Singapore’s zoning laws, for example, no one can build a chemical dump in the centre of Bedok New Town. These overseas land dealers sell plots “zoned” for low value purposes (e.g. landfill), and tell you the zoning laws are about to change: Soon they’ll be able to build a mall there.

By buying the land before the zoning laws change, you’ll make a bundle.

And if the government there has no published plans to change the zoning laws, don’t worry. They’re in “confidential talks”. Where confidential = non-existent. Buyers tend to end up with plots of worthless land, which might appreciate in about two centuries.

And if you want to offload that plot later, good luck. Selling land overseas has all the ease of flossing a live alligator.


3. No Cash Down Property


Albany landfillAlbany landfill

No, it’s not a mistake. This is also the picture for a typical “no cash down” property.


You may have seen the ads: Seminars on “no cash down” properties.

You’ll be charged a lot of money (maybe $3,000+), to hear how to buy property without a down payment. The “advice” ranges from the obvious to the hair-raising. Some typical examples:

  • Ask friends and relatives for money. Because apparently, you had to pay $3,000 to know this.
  • Make a joint purchase. Never mind the future headaches when you want to sell, but the other buyer doesn’t. Or if someone pulls out after the option is signed.
  • Apply for a personal loan for the down payment, at the exact same time as the housing loan application. Because the personal loan may not be reflected yet, when the bank checks your debt servicing ratio. I know that trick too. I just told it to you for $3,000 less.

These seminars don’t tell you how to avoid the down payment. They just tell you ways to borrow the money. If you need help affording a house, follow us on Facebook instead.

But how about “no cash down property” itself, as an investment?

The simple answer is dangerous. Not because the property market is bad, or because there’s a scam involved. It’s just dangerous because, if you had to duck and dodge to make the down payment, you’re probably trying to buy something you can’t afford.

Think about what it means to cheat the bank’s debt servicing ratio: It just means you get to take a loan which, by professional estimates, you might not be able to pay.


4. Industrial Chemical Products


Vat of snake sakeVat of snake sake

And also, it uses all natural products. Ecologists will love that.


This one has a few variations. “Industrial chemicals” are the most commonly used product description. But variations include vaccines, cleaning products, and agricultural chemicals.

This is when a company claims to have developed a potent chemical, with sci-fi qualities. It supercharges machines, increases refinery output, cures cancer if you stand close enough, etc. If you’ll invest in the company, they’ll produce and market this miracle product.

The return on investment will be incalculable  You could get triple or quadruple the money back. Apple couldn’t match it if Steve Jobs were cloned in a vat and re-hired. There are just two problems:

First, most people who invent an industrial chemical or vaccine don’t buy a factory and start making it. They patent it and sell it to existing companies. But okay, benefit of the doubt and all. Let’s say these are the rare exceptions.

You have the second problem of no product history. Even assuming you have the chemistry degree needed to understand the product, you can’t take their “projected returns” seriously. If people knew which products would yield 12.5% returns by year one, business would be a hell of a lot easier.

Most people who fall for this end up being ripped off (the company closed down and ran with the money), or getting far lower returns than promised. Other times, internal management issues tear the company apart (i.e. one partner wants to shut it down, because he p;ans to open his own company manufacturing the same product).

There are too many risks and complications in this sort of “investment” to make it worthwhile.
Image Credits:
Thirteen of Clubs, digitalmoneyworldiris goldstein, robizumi

Seen any dubious investment rip-offs? Comment and let us know!

Get more Personal Finance tips and tricks on www.MoneySmart.sg

Click to Compare Singapore Home Loans, Car Insurance and Credit Cards on our other sites.



More From MoneySmart

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
Loading...
  • Global equity deals rise in third quarter but down 30 percent year-to-date - Thomson Reuters data Reuters - 5 minutes ago

    Global equity fundraising rose in the third quarter, Thomson Reuters data showed on Friday, but failed to make up for the sharp slowdown of the first half of 2016, when volatile markets deterred listings. Bankers said a robust pipeline of deals may … More »

  • Oil prices down on profit-taking after two-day jump
    Oil prices down on profit-taking after two-day jump Reuters - 9 minutes ago

    Oil prices dropped on Friday on profit-taking, after rising 7 percent in the past two sessions, amid doubts that OPEC's first planned output cut in eight years would make a substantial dent in the global crude glut. The Organization of the … More »

  • Windfall in District 20
    Windfall in District 20 The Edge Property - 10 minutes ago

    The bigger profit of $6.1 million accrued to a two-storey bungalow at Windsor Park Estate, which was sold for $8.6 million, or $1,203 psf on land area. Since the seller purchased the freehold property with a land area of 7,147 sq ft in June 2006 at … More »

  • Tokyo shares open down on Deutsche Bank worries AFP - 13 minutes ago

    Tokyo shares opened lower Friday as Deutsche Bank's woes dented financial stocks while sentiment was also hit by weak Japanese data that aggravated concerns about the economy. The weak start followed a ... … More »

  • Nutanix IPO shows risks of 'unicorn' valuations Reuters - 16 minutes ago

    In the run-up to its initial public offering, cloud computing company Nutanix scrambled to avoid a situation that has increasingly marred technology IPOs: a price that is below the most recent private funding round. After initially pricing shares … More »

  • Nutanix exceeds expectations in upsized IPO Reuters - 17 minutes ago

    San Jose, California-based Nutanix's share price exceeds the $13.40 value last placed on its shares in a 2014 funding round, an upgrade encouraging for the many unprofitable technology companies that, like Nutanix, have been weary of testing public … More »

  • 4 Ways Money Can Stop You From Being Successful
    4 Ways Money Can Stop You From Being Successful GET.com - 28 minutes ago

    I'm sure many Singaporeans would agree that having money is part of being successful. But have you... … More »

  • Tenants’ flight to quality puts pressure on Grade A office space rents
    Tenants’ flight to quality puts pressure on Grade A office space rents The Edge Property - 32 minutes ago

    Tenants’ flight to quality has put pressure on rents of Grade A office space, according to Knight Frank’s latest Singapore 3Q2016 office bulletin. Meanwhile, Grade A+ office space in the same area saw a rental decline of 2.1% to between $9.30 and … More »

  • Homebuyers' wish list
    Homebuyers' wish list The Edge Property - 32 minutes ago

    Private homes priced between $1 million and $1.5 million were the most sought-after among the respondents polled in a joint survey by Knight Frank and The Edge Property. The survey found that 217 of the 500 respondents, or nearly one in two, were … More »

  • China Seeking to Succeed Where Japan Failed in Yuan Global Push Bloomberg - 43 minutes ago

    The Japanese yen’s share of global reserves reached a record 8.5 percent in 1991 as the nation’s post-War industrial boom made its economy the world’s second-largest. While the yen is still ranked third for trading and fourth for payments, it now … More »

  • Japan CPI, consumption fall again, keeping Bank of Japan under pressure Reuters - 48 minutes ago

    Japan's core consumer prices fell in the year to August, a sixth straight drop, keeping the Bank of Japan under pressure to ease monetary conditions further as it reboots policy in a bid to hit 2 percent inflation more quickly. Household spending … More »

  • ‘Whistle-Blower’ Suit Against Chinese Bank Withdrawn in New York Bloomberg - 53 minutes ago

    Natasha Taft, the bank’s former chief compliance officer in the city, had alleged she was penalized for telling the Federal Reserve of money-laundering risks from international trade-finance transactions. The case was Taft v. Agricultural Bank of … More »

  • Singapore Insurance Policies as Investment Products
    Singapore Insurance Policies as Investment Products ZUU online - 1 hour 2 minutes ago

    Insurance policies currently available for individuals to purchase in Singapore: 1. Ter... … More »

  • Asian Stocks Fall as Banks Are Dragged Lower by Global Concerns Bloomberg - 1 hour 4 minutes ago

    The MSCI Asia Pacific Index dropped 0.9 percent to 140.05 as of 9:07 a.m. in Tokyo,. A measure of Asian financial stocks weighed most on the benchmark, falling 1 percent as Japan’s Mitsubishi UFJ Financial Group Inc. and Australian lenders … More »

  • Chinese Yuan’s Ascent to Global Reserve Status: A Timeline Bloomberg - 1 hour 5 minutes ago

    Its entry into the International Monetary Fund’s Special Drawing Rights -- alongside the dollar, euro, pound and the yen -- will help further China’s efforts to boost international usage of the yuan at a time when the currency’s share of global … More »

  • Japanese Shares Drop as Lenders Slump on Deutsche Bank Concerns Bloomberg - 1 hour 14 minutes ago

    Deutsche Bank’s New York-listed shares tumbled after Bloomberg News reported about 10 hedge funds doing business with the German lender have moved to reduce their financial exposure. The rout follows a request from U.S. authorities that Deutsche … More »

  • Alarm Bells Sound in New York as Duterte’s Audit Shakes Up Mines Bloomberg - 1 hour 24 minutes ago

    The threat to shutter about three-quarters of the nation’s mines risks savaging the country’s reputation among investors, according to the head of a company whose operations face suspension. “I just came from New York, and investors are very … More »

  • Goldman feels the heat in Asia as IPO engine slows
    Goldman feels the heat in Asia as IPO engine slows Reuters - 1 hour 29 minutes ago

    Goldman Sachs (GS.N) failed to make it to the upper echelon of Asia's equity market fee earners for the first time in more than a decade, hit by a squeeze in fees that is prompting the U.S. bank to cut back jobs in the region. Goldman has shared … More »

  • Japan’s Consumer Prices Fall for Sixth Straight Month in August Bloomberg - 1 hour 29 minutes ago

    Industrial production made a modest gain, while household spending slumped and the jobless rate held near the lowest since 1995. Consumer prices excluding fresh food, the Bank of Japan’s primary gauge of inflation, dropped 0.5 percent in August … More »

  • VW's Skoda to ponder U.S. production amid market push Reuters - 1 hour 50 minutes ago

    Volkswagen's (VOWG_p.DE) Czech division Skoda said it will assess the possibility of building cars in the United States as it considers selling in the world's second largest auto market where its parent continues to grapple with an emissions … More »

  • Most Asian Index Futures Drop Amid Bank Rout; Oil, Copper Swing Bloomberg - 1 hour 52 minutes ago

    Shares in New Zealand fell early Friday with U.S. index futures, as contracts on equity gauges in Japan, Australia and South Korea foreshadowed losses. Financial stocks drove the S&P 500 Index lower last session amid concern over Deutsche Bank AG … More »

  • Bunker-busting bombs close Aleppo underground schools: charity
    Bunker-busting bombs close Aleppo underground schools: charity AFP News - 2 hours 15 minutes ago

    Bunker-busting bombs are putting children in so much danger in Syria's Aleppo that they won't even be able to return to underground schools when classes resume this weekend, a charity said Friday. The "ferocious assault" on Aleppo could deprive … More »

  • Elliott Management takes 8.1 percent stake in Mentor Graphics Reuters - 2 hours 35 minutes ago

    (Reuters) - Activist hedge fund Elliott Management said it picked up an 8.1 percent stake in electronics hardware supplier Mentor Graphics Corp (MENT.O), a few months after Carl Icahn exited the company. ... … More »

  • Obama, Merkel condemn 'barbarous' Russian, Syrian strikes on Aleppo
    Obama, Merkel condemn 'barbarous' Russian, Syrian strikes on Aleppo AFP News - 2 hours 43 minutes ago

    US President Barack Obama and German Chancellor Angela Merkel condemned what they called "barbarous" Russian and Syrian regime airstrikes on Aleppo during a phone call Thursday, the White House said. The Syrian government and its ally Russia "bear … More »

  • Deutsche Bank shares sink 7% as hedge funds pull money out AFP - 3 hours ago

    Deutsche Bank shares sank seven percent Thursday after news that a number of hedge funds had pulled money out of the German giant amid worries over its financial strength. The move to sell off the German ... … More »

 
Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
 
Sign-in to view quotes in your portfolios.

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    0.156-0.004-2.50%
    N21.SI
    0.110.00+2.80%
    40F.SI
    3.95-0.07-1.74%
    Z74.SI
    0.735-0.010-1.34%
    G13.SI
    0.280.00-1.75%
    5ME.SI
  • % Gainers
    % Gainers
    NamePriceChange% Chg
    1.70+0.18+11.84%
    BAI.SI
    0.32+0.03+9.22%
    BJE.SI
    0.255+0.015+6.25%
    BQM.SI
    0.475+0.020+4.40%
    CZ4.SI
    0.110.00+2.80%
    40F.SI
  • % Losers
    % Losers
    NamePriceChange% Chg
    0.435-0.015-3.33%
    T55.SI
    0.31-0.01-3.12%
    5OT.SI
    0.108-0.003-2.70%
    SK3.SI
    0.73-0.02-2.67%
    BS6.SI
    0.156-0.004-2.50%
    N21.SI

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    1.3657+0.0017+0.12%
    USDSGD=X
    1.5314+0.0014+0.09%
    EURSGD=X
    1.7695+0.0014+0.08%
    GBPSGD=X
    73.9130-0.158-0.21%
    SGDJPY=X
    5.6775-0.0065-0.11%
    SGDHKD=X
    3.0323+0.0094+0.31%
    SGDMYR=X
    9,516.8213-25.8916-0.27%
    SGDIDR=X
    4.8846-0.0024-0.05%
    SGDCNY=X
    1.0415+0.0006+0.06%
    AUDSGD=X
  • Commodities
    Commodities
    NamePriceChange% Chg
    1,326.80+0.80+0.06%
    GCZ16.CMX
    19.16-0.03-0.15%
    SIZ16.CMX
    95.01-0.66-0.69%
    ^XAU
    2.190.00-0.05%
    HGZ16.CMX
    43.85+0.41+0.94%
    CLV16.NYM
  • Bonds
    Bonds
    TreasuryYield (%)Yield Change
    1.12-0.01
    ^FVX
    1.56-0.01
    ^TNX
    2.28-0.01
    ^TYX