“Show me a universal life manual and I will show you a ready-made scam.
Life is spontaneous. Live and learn.”
– Magnus Nwagu Amudi
Always remember the number one universal rule for investment- never lose your money! And yes- rule number two- remember rule number one.
As I have written in my previous post, avoid three poisons and you will be safe from being scammed by anyone.
We hope to earn as much money as we could and as fast as possible. This mindset always makes us fall into an investment scam if we are not vigilant enough.
Property Investment
I bought my first property after my housemanship training. For me, property investment should be the easiest way to make money.
After purchasing a few properties, I found that the outgoings of buying a rental property were just too much. Besides paying legal fees, I needed to pay for stamp duty, agent’s fee, etc etc.
I was looking for a better way to invest my hard-earned money back in 2004-2005 working as a medical officer in the government hospital.
Investment Opportunity ?
One evening when I was reading the newspaper in 2004, I noticed an advertisement about a property investment opportunity. The title was just too catching- “Make 25% every 6 months!”
I attended the talk by a gentle, soft-spoken, and kind gentleman Mr. S* who explained to me the reasons he started the company to help fellow Malaysian investors to make money from property investment.
His ideas were quite simple, his company would pull all investors’ money to buy auctioned properties. After simple repainting, these properties would be sold within 6 months. He claimed he had done the flipping many times before, the profit margin ranged from 25-45%.
I signed up for the membership. The fee was MYR500 per annum. I remembered there were only four attendees during that property talk and all of us signed up to join the club.
I worked harder
Yes, I worked harder to earn more money to invest, investing MYR 800-MYR1000 every month into the fund. I got back every single cent I invested plus an extra of 25-30%. I noticed more and more people had joined the club. Since we were the pioneer members, I was invited to the stage to share my experience every time Mr. S had his seminars in Penang.
Mr. S* introduced another level of membership after 2 years. Under this new arrangement, we were given an option to buy the property under our own names. The club would help members to flip the property within months. Mr. S* promised to buy up members’ properties if the club was unable to sell the properties to the general public after 6 months.
Most of the old members were lining up to upgrade their memberships because after paying an annual fee of MYR5000, there would be no limit for yearly maximum investment ( which was capped at MYR10,000 per year.) I did not jump on the bandwagon because I couldn’t afford to buy the whole property.
Usual ending of the story
I sensed something was not right. Mr. S kept on recruiting new members. I stopped investing more money into the club. After a few months, Mr. S just disappeared and not contactable, our returns did not come back as promised.
I lost a total of MYR 3000 in the scheme. My friend, who joined the premier membership, lost a total of MYR200k. He refinanced his home and bought two properties by himself, hoping to flip the properties in 3 months. All these ended with financial nightmares.
Mr. S ran away with MYR50 million of investors’ hard-earned money. He is nowhere to be found until today.
Conclusion
I learned from this investment scam the following lessons,
- Never entrust your money to someone else, learn how to invest yourself.
- There is no free lunch in this world, when it is too good to be true, it is always not true.
- Never invest in anything you are not familiar with.
- No matter how legit the idea seems to be, it still can be a scam!
- If the investment club keeps on recruiting new members and encourage you to recruit members, it might be just a Ponzi scheme.
