CAUTION: If it's too good to be true, it probably is

Avoid falling prey to “get-rich-quick” schemes.

There are many schemes out there that promise impressive returns with claims of little to no risk. The reality is that all investments carry risk - the higher the expected returns, the riskier the investment.

Don’t be fooled by flashy websites or testimonials of “satisfied” customers who claim to have made tons of money. These may not always be true. Even if customers seem happy, bear in mind that they may be unaware of troubles brewing behind the scenes.

Always do your own homework before deciding whether to invest. Here are 5 basic questions you should always ask about the scheme and its operator:

1. How does the scheme make the profits it is promising?

Ask about the events the returns are dependent on and the likelihood of them materialising. Find out how long you need to stay invested and what your exit options are. Remember that scheme promoters have incentives to paint the rosiest scenarios - don't be too quick to believe all they say.

2. What is the track record of the entity and/or its operators?

Check if the entity is credible or has the experience/qualification to carry out the activities. Search online for negative reviews, or check ACRA's website to see if they have been filing annual returns. These are useful indicators of an entity's health.

3. Can they provide me with a written copy of all representations made, particularly those relating to promised returns and payouts?

Written evidence will be useful in the event of "he-said-she-said" disputes. Refusal to provide this is a huge warning sign that something may be amiss.

4. Is the scheme authorised or the entity operating or promoting the scheme regulated?

Consumers seeking financial services are strongly encouraged to deal only with firms that are regulated by MAS. You can use the Financial Institutions Directory, which provides a listing of the names of regulated persons in respect of the provision of financial services under the various Acts administered by MAS.

5. If anything goes wrong with my investment, what options do I have to get my money back?

Consider if these options are likely to be successful, and if so, the time it will take before you can recover your money.

If you are unable to obtain satisfactory answers to the above, we strongly encourage you not to proceed with the transaction. If you suspect a scheme is involved in criminal wrongdoing or fraud, you may wish to report the matter to the Commercial Affairs Department.

Remember that at the end of the day, it is your money at stake. Only part with your money if you understand and are comfortable with the risks involved- including losing part or all of your capital.

More Information

  • A list of common unregulated schemes can be found here.
  • ACRA’s online consumer guide provides information on how consumers may make use of ACRA’s information services to conduct basic background checks on business entities. Access the consumer guide here.