by Donald Sevilla
IS FINANCIAL LITERACY A MUST?
With the series of scams one after the other that victimized Boholanos of their hard-earned savings, it is imperative that our people put a premium on financial literacy.
To begin with, all scams start with irresistible come-ons to attract investors.When something is too good to be true, it is too good to be true. This is basic and should serve as the first rule of thumb when offered fancy, high-yield returns on investment.
While high-risk investments make for higher returns, a financially literate person is not quick to jump the gun. People are victimized easily because they fall for the tempting offers being dangled.
More importantly before embarking on any financial undertaking, due diligence is a must. In the case of the FOREX trading investment platform being offered that hit our Boholano brethren, it is imperative that we know what was being sold.It appears that lucrative returns were promised on money placements at a fixed rate of high return.
Well in forex or any trading platform for that matter, you cannot guarantee a fixed rate of return as there are many variables to consider. Fixed returns could be possible but at the lowest minimum rates. not at ridiculously high yields.
If something like this happens, then automatically it should create a red flag. Forex trading is not for the ordinary investor as one has to be skillful enough, alert at monitoring various currency exchange rate fluctuations especially on ones you are betting against or hedging.It requires full-time and real-time access to the currency exchanges in various markets world wide. Most savvy investors have their eyes constantly glued to Bloomberg’s on their tv screens.
As money never sleeps, markets open and close at different hours of the day and moves 24/7 around the world.Tracking it is a full-time job made possible with the assistance of a competent and experienced broker or financial advisor.
” Retail forex trading is not legal in the Philippines nor are any local brokers licensed to offer forex and CFDs according to our local financial market’s regulator which is the SEC.”
This being so, forex trading here operates through foreign “forex brokers” who do the trades, mostly from companies out of Jakarta, Indonesia or Singapore and who have local agents.
But was the company soliciting forex trading in Bohol affiliated with any? It appears from the very start it was a Ponzi scheme relying on more and additional investors to keep putting money in until the well dried up. The word “forex trading: was perhaps a fancy way to lure people to get involved and to justify the high rate of return without arousing suspicion.
This explains why according to reliable sources the operation was doing good for three years until it collapsed. Basically it was nothing more than a pyramid, a Ponzi scheme in reference to the elaborate manner by which a person named Charles Ponzi conned people in a “classic Rob-Peter pay Paul” fraud.
As if things were not enough and people never seem to learn, Boholanos fell prey to the “Repa Scam”, this time appealing to the masses, victimizing people from all walks of life.
While forex trading had victims from the ” moneyed class” repa victims were more mundane and average. It struck hard on the ordinary people who were hopeful to make a quick buck.
At any rate, such unfortunate financial misadventures should be a wake-up call for all of us. We must not be gullible and ignorant on how to handle our finances. There is no such thing as easy money and nothing beats the hard-earned fruits of our labor.
Yet we must not only educate ourselves to read and write but to be financially literate!