Be wise, and if you aren’t sure you can be, ask Peter

I want to tell you about a goat.

Many years ago there was a policeman whose prized possession was Billy – a goat. The policeman was the only one allocated to the township of Tarkastad. He was very proud of his goat.

One day Billy disappeared. He searched high and low, but to no avail. In the end, he had to face the fact that Billy landed up in the belly of some hungry chap. He suspected a particular villager. The more he thought about it, the more convinced he became of this.

He approached the magistrate for an arrest warrant. The magistrate asked for evidence of the crime. The problem was that the policeman had none. That evening he discussed the matter with his wife. She explained what evidence was needed…

A day later the proud policeman arrived at court with the culprit – the villager in question. When my uncle (who happened to be the magistrate!) asked for proof, the policeman placed a pile of goat droppings and some dried out bones on his desk.

Our detective argued that the villager owned no livestock. The droppings and bones were found at the back of this poor villager’s rondavel. Next to it was what could only be a dried pool of blood. The policeman deduced that this was irrevocable proof that his goat had been present at the rondavel.

Bye-bye Billy, hello Peter

Now granted, I don’t know much about goats. I do know about money and investment. I also know that Billy can teach us something about the latter.

The thief may have been caught, but the goat was gone

It seems to me that the policeman should have taken greater care of securing his prized goat while it was alive. It was allowed to roam the village freely and there were many hungry people. Someone was bound to see poor Billy as a free meal ticket.

Protect your assets

Do not flaunt your goat! Okay, so you don’t own any, but maybe you have received a retrenchment package, or maybe you have recently retired and had a provident fund payout. Maybe you inherited some money from that overbearing aunt of yours. I am sure this is a great relief, but be careful who you tell! And not only you but your children, your partner, your cousin, your best friend. If each person ‘only’ tells one person, soon the whole neighbourhood will know about it. Money-hungry opportunists lurk around corners, listening, waiting.

Hello Peter, what can you tell me?

Before I spend my money on a service or a product, I think about the service I am likely to get. I have found that it pays to visit one of my ‘best friends’ on the internet: hellopeter.

Hellopeter is a digital platform where consumers can leave a review of a company in terms of its services or products. They cover a vast array of industries so whether I want to know how customers experience MTN, Discovery Bank, or Woolworths 0nline, I pay a visit to hellopeter.

If there is a new scam, someone is bound to have been angry enough about it to have blown off steam about it on this site.

Desperate times, desperate measures?

During the lockdown, many lost their income. Where there is desperation, there is always someone ready to take advantage of it. Unscrupulous salespersons had a field day, offering second or passive income streams.

Trade like the pros!

We have been forced to become increasingly reliant on the internet. It means we are becoming more and more tech-savvy and find that, surprisingly, we can do quite a lot of what was once considered jobs for specialists. So why not try this, too?

What have you got to lose? Especially since they so kindly provide you with a demo account for practice purposes? What you may not know is that these software programmes were designed to lull you into a false sense of security. They do not reflect reality: markets are volatile. It is a challenging environment even for brokers who have years of experience and training. You can, and probably will lose big. It has become necessary for the Financial Sector Conduct Authority (FSCA) to name and shame some of these organisations.

But we ARE legitimate – here’s our FSCA licence

Some companies will provide you with a FSCA number and use that to suggest they are ‘licenced’ to sell you financial products or services. FSCA issues many kinds of licences. ALL LICENCES ARE NOT CREATED EQUAL.

The lowest level of licence grants you the right to sell funeral policies. The compliance bar is very low and the educational requirements even lower. One does not even need a Matric certificate to sell funeral plans.

How is this for irony?

The licence of the company who is promising you the money you need to live your best life may only allow them to help you plan your funeral. Check with the FSCA what that licence covers. Remember, no licence, no protection. In some cases, consumers began to complain in numbers. The salespersons turned around and basically said ‘did you read the fine print? We only sold you software, which we delivered. We did not promise you a set income.’

https://www.iol.co.za/personal-finance/warning-be-careful-with-forex-trading-platforms-during-lockdown-46768473

A pyramid scheme by any other name… will still be a pyramid scheme

Is it a multi-level selling pyramid? It is illegal. A multi-level sales structure looks as follows:

You see an advertisement on Facebook, WhatsApp or the classified section of the neighbourhood newspaper:

Now hiring: 100 Salespersons for our Rapidly Expanding venture. No Experience needed!!! We share our trade secrets, provide you with training, allow you to use our licence and materials!!! We will even give you Genuine Leads to follow up! All you need is to Pay for the Training. Licencing is optional. Share the love with your friends and family and earn rewards for every person that signs up!

It promises that you can:

  • Work from the comfort of your home.
  • Set your own hours.
  • Decide on how much you want to earn. (During the sales interview you will be told that some earn up to R20 000 per month in commission.)

What can possibly go wrong?

  • You have to sell share trading software.
  • The prospect list could be made up of retirees who could not afford the R25 000 buy-in price.
  • The sale pitch manipulates the proposed investor.
  • What you did not know is that the R20 000 commission was dependent on ten sales per month.

Baby Shark is not just an annoying song

One of the worst schemes I have seen works as follows: Someone living is a poor suburb is
approached and taught how to get their neighbours to qualify for small loans. They ‘earn’ an income by getting a cut of the interest rate charged to their neighbours.

They are encouraged to start with their neighbours and then to move onto their friends. Soon enough the person is earning R4 000 to R5 000 a month. That is until they run out of neighbours… You do tend to run out of friends when they are being threatened with violence by the moneylender.

So give me a rule of thumb to follow, please!

  • Ask your Aunty Google if she knows if the business exist, where they are physically based and if they are licenced to do what they say they do.
  • Speak to your cousin hellopeter – what is the latest gossip on the company?
  • Speak to some of the actual staff and don’t be fooled by jargon or promises.
  • Don’t only rely on testimonials – ask to speak directly to other investors, preferably that has been with the company for a while. Do the follow-up!
  • Lastly, before you make an investment of your precious resources in anything, ask your Financial Adviser to look over your notes.

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