Don't be Conned

I don’t know why people are so gullible especially when I comes to making easy money. Investment Companies promising to pay weird rate of returns have duped so many people. Its sad that people invest their had earned money without realizing as to what they are getting into. Then there are those petty criminals waiting to lighten your pockets given the slightest opportunity.

Over the last 6-7 years these investors have lost about Rs 75,000 Crores. The main culprits have been the investment companies. Most of these Companies almost follow the same modus operandi. They promise huge rate of return, people begin to invest in them, for a while everything is normal, u get those nice returns. You talk to your friend he is excited too, he puts his money also, the word spreads slowly and once the Company has a substantial amount, they just vanish in thin air. That swanky office and everything is gone and you are left licking your wounds.

This is just a little attempt to prevent people from losing their hard earned money.

There was this lady in Punjab, who ran one such investment Company, the Interest rate was a whopping 10% monthly on your investment. You invested Rs 100000 at the end of the month it wud become Rs 110,000, without thinking so many people invested their money, for a few months everything was smooth but one day she had gone, taking along with her those crores of rupees.

My brother in law was telling me about one such Company in which he had invested some money. He was telling me how he gets his interest every month, which was 30 % per annum. The Company had very diverse business and running very well. I asked him to get his money out as soon as possible, because this Company is going to disappear, he wasn’t convinced but he did get his investment out. But many others were not so fortunate, the Company had gone.

I am no magician, I don’t have that crystal ball to gaze. Its just plain common sense. When a Company is paying an interest rate which is much higher than the rate at which the Company can borrow from the bank, there is surely some thing fishy. If a Company is into sound business, and it needs funds it shud be heading to a bank from where it can raise money at 14-15%, why shud it be paying those weird rates of return to people. So if they are not borrowing from the bank then either there business plan is not sound or they have some other motive, that is duping the public.

Many people burn there fingers by jumping into equity markets without having any knowledge whatsoever. People shud invest in equities only if they are well informed, investing money in stocks because xyz said, or some one told u that this is a nice bet is only inviting trouble. I have seen people putting money in Companies of which they have no clue.

Although the Securities and Exchange Board (SEBI) does its best to prevent scams but still there are people sitting to snatch your hard earned money.

There are many small companies which don’t have a very large market capital (market capital is the number of shares of Co. in the market x by its share price), these are the Companies which one shud be vary off, since the number of shares is not very large individuals get together to manipulate prices of these stocks. First individuals wud quietly keep buying a particular stock, when they have accumulated the quantity they wanted, they artificially jack up the price. See how it works, I have my friends sitting on different terminals, the current market price is say Rs 8, I place a order to sell 5000 shares at 8.50 Keshi buys that, then Keshi places a sell order at 8.75 and Sebia picks up those stock. Sebia then places a sell order at 9 and Fairy buys that. So this goes on for a while, stock prices increase by 4-5 times. The people oblivious of the game we had be playing, watch how the stock is going up everyday and they jump into. I don’t know why people in stock market have a herd mentality but they do, so when these guys jump in my frnds quietly sell off our holding which we had picked up at very low prices.

So don’t get into equities if u don’t have a clue, and if ur really keen u can go through the records of the Companies that are available on the internet or u can invest through well known funds and let professionals manage your portfolio.

Then there are those petty criminals, on the net, on the roads every where, waiting for an opportunity. On the Net lot of u must have come across that mail, we have this huge amount lying in an unclaimed account, if u help them transfer that money then u get a fat percentage. Once u bite the bait u are asked to send the initial processing fee etc, and by the time u realize that u are being conned, u have lost a few hundred dollars.

A nice trick very popular on the streets of Delhi, is that the prospective victim is sitting in his car waiting for some one, with his bag lying on the back seat. A guy walks up quietly drops some money, and tells him that probably u have dropped ur money. U think may be I did, u get down to pick up that money. When u got home u realize that ur bag is gone, when u were picking up that money another accomplice disappears with the bag. So next time some one tells u that u have dropped money, pick it up but before that make sure ur belongings are safe…lock ur car……

I hope this wud help at least a few people in making wise investment decisions and not falling victim to some conman, don’t just read this post, share it with ur relatives and frnds and if u have any similar experience lets hear…..