If it sounds too good to be true…

I learned of a new scam this past week – a stokvel administered via social media. A mere week into the scam and already people were complaining that they’d been swindled!

It is understandable why people fall for these scams – times are tough, and people are having to make-do with very little. In the same breath, a lot of people are tempted due to ignorance and plain greed.

When deciding to commit your hard-earned cash to any product, be it a conventional investment or something a little more exotic like a stokvel on social media administered by strangers, ask yourself the following questions:

  • Do I understand what I’m investing in and does this really make sense? (for example, how will my R200, or however much is required to join, miraculously generate millions in a few days?)
  • Can I afford to lose the money invested?
  • Can I verify any of the individuals and/or investments in question with any reputable institution?

If you answer ‘no’ to any of the above questions, think twice before you commit your money. Do your homework and ensure that you at least do the following:

  • Take the time to get as much information about the individuals behind the product. Can they be verified through known bodies such as the FSCA, FPI or JSE to name a few
  • Understand what you are committing your money to. In this era of information, your lack of information is largely your own doing
  • Understand the underlying investment and how it generates returns

The simple truth is that, if what you’re committing your money to sounds too good to be true, it probably is.

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