Homepage
PR Newswire
19-09-2010, 09:44 AM
Sep 19, 2010
Beware talk of easy money
Before signing up for courses, scrutinise the trainers and their tools
By Lorna Tan, Senior Correspondent
On a recent weekday evening, 50 people sat in a hotel function room, attending a preview seminar on foreign exchange (forex) trading.
The facilitator whetted their appetites by highlighting four techniques that would be taught during the three-day forex programme to be held later that month.
At the end of the 21/2-hour presentation, the audience scrambled to sign up for the $3,776 forex programme when they learnt there were only 12 spots left.
Many were attracted by promises made during the preview that it is 'very achievable to make $200 to $1,000 a day' as well as a '100 per cent guarantee' of success.
Flip through the newspapers and you can easily spot several advertisements marketing finance- related workshops in forex, options or stock trading. Most claim to help participants make money with little cash outlay and under all market conditions as well as offer the potential for limited losses and unlimited gains.
The stark reality is that only a small proportion of people who attend such programmes end up making money. And those who made money were able to do so because they took the initiative to learn more than what was taught by the programme.
Investor Henry Yap, 30, attended a forex programme a year ago and started trading on his own soon after.
'I have lost more than US$3,000 (S$4,000) since I started trading... I know of others who lost $20,000 to $30,000 in one year,' he said.
A forex trader with 20 years of experience of trading forex for major banks told The Sunday Times that the claims made by many of these firms did not pan out.
'Anybody who is familiar with the forex markets knows that these are probably the most efficient markets in the world where opportunities to make money are very difficult to find. Anybody who claims that he can teach somebody how to make money trading forex after attending a course is ignorant of how the markets work,' said the trader, who declined to be named.
The Consumers Association of Singapore (Case) has received inquiries and complaints about such programmes. In 2007, there were seven cases. There were 18 cases in 2008 and 16 last year. So far, Case has received 10 cases this year. They range from complaints about pressure selling to alleged misrepresentation on the cost and benefits of the programmes.
Nine of last year's cases and five of this year's received by Case involved forex trainer Powerup Capital. Other firms included FX1 Academy and Momentum Asia.
Said Mr Seah Seng Choon, Case's executive director: 'Consumers should not be taken in by hyped-up promotions and advertisements. They should take time to evaluate the risk involved before parting with their money to pay for expensive investment courses.'
He added that there is a tendency for such advertisements to highlight rare successes but ignore the more frequent losses. He also advised consumers to be mindful that not everyone is cut out to be a trader, even when equipped with the best tools.
Here's a checklist on what to look out for before you sign up for such courses.
1. Background check on firm
By paying $5 to the Accounting and Corporate Regulatory Authority (Acra), you can get a copy of the firm's business profile report with information on when it was set up, its paid-up share capital and management.
Check if the firm is on the Monetary Authority of Singapore's alert list. Find out the number of programmes conducted in the past and whether there were complaints from past participants.
2. Trainer's qualifications
Ask for the speaker's curriculum vitae and do background checks, for example on the qualifications of the speakers, particularly those who were trained overseas, said Mr Seah.
Check whether their qualifications are from an approved tertiary institution. This could be done at the relevant embassies.
3. Preview session
It is useful to attend the preview of the training programme to gauge how relevant it is. You need not sign up on the spot. Instead, take your time to consider.
Wherever possible, ask for independent views on the robustness of the programme. Besides confirming the cost of the training programme, find out whether there are other costs involved such as reading materials, software and certifications.
4. Endorsed programmes
As far as possible, enrol in programmes endorsed by official bodies such as the Workforce Development Agency (WDA) or reputable organisations such as financial associations. This is because training programmes backed by WDA need to adhere to a specified standard of delivery, said Mr Seah.
5. Sales pitches
Trainers may sometimes use aggressive or pressure sales tactics to get you to sign up on the spot.
For instance, you may be encouraged to sign up so that you won't be left behind or because there is a special offer for a limited period only.
Do not be rushed into making a decision. Take your time to understand the investment tool. You can always follow up later when you have had time to think about it.
Mr Seah said that Case takes a serious view of companies which put undue pressure on consumers. And such vendors could be breaking the law by doing so.
'If the consumers find that the vendors are exerting undue pressure on them or mislead them to attend the seminars or workshops by guaranteeing exaggerated, unattainable or unrealistic financial success and skills from the talk, they could take them to task under the Consumer Protection (Fair Trading) Act,' advised Mr Seah.
6. Substantiating claims
Sometimes, a speaker might refer to past performances to show how easily and quickly money can be made. When that happens, you should ask for substantiation. Ask for proof of the number of people who have benefited from the programme and how much they made. If something seems too good to be true, it probably is.
7. Buying trading software
During or after the training programme, trainers may market software to help you trade in the various markets, be they commodities or shares. But do not be taken in unless there is concrete proof that such software serves your purpose. Make an informed choice and find out the strengths and weaknesses of the software, cautioned Mr Seah.
There are many investment tools in the market, so shop around and obtain independent views on the usefulness of the software.
8. Overseas investments
You should differentiate between investing here and overseas. If the investment is in Singapore, ensure that it is regulated by the authorities.
For example, overseas land banking is not a regulated investment here as the property is located outside Singapore and the purchase is governed by a foreign jurisdiction. Bear in mind that it would be difficult or costly to pursue the matter in a foreign land.
9. All investments carry risk
There is no guarantee that the investment tool on offer will automatically bring success. All investments come with risks. And trading in the markets carries a high risk. The higher the potential returns, the higher the risk. Consumers not prepared to stomach high risks should not get involved.
Also, you should consider whether you are willing to put in effort and time to study the product and whether it is in line with your financial goals.
lorna@sph.com.sg
Beware talk of easy money
Before signing up for courses, scrutinise the trainers and their tools
By Lorna Tan, Senior Correspondent
On a recent weekday evening, 50 people sat in a hotel function room, attending a preview seminar on foreign exchange (forex) trading.
The facilitator whetted their appetites by highlighting four techniques that would be taught during the three-day forex programme to be held later that month.
At the end of the 21/2-hour presentation, the audience scrambled to sign up for the $3,776 forex programme when they learnt there were only 12 spots left.
Many were attracted by promises made during the preview that it is 'very achievable to make $200 to $1,000 a day' as well as a '100 per cent guarantee' of success.
Flip through the newspapers and you can easily spot several advertisements marketing finance- related workshops in forex, options or stock trading. Most claim to help participants make money with little cash outlay and under all market conditions as well as offer the potential for limited losses and unlimited gains.
The stark reality is that only a small proportion of people who attend such programmes end up making money. And those who made money were able to do so because they took the initiative to learn more than what was taught by the programme.
Investor Henry Yap, 30, attended a forex programme a year ago and started trading on his own soon after.
'I have lost more than US$3,000 (S$4,000) since I started trading... I know of others who lost $20,000 to $30,000 in one year,' he said.
A forex trader with 20 years of experience of trading forex for major banks told The Sunday Times that the claims made by many of these firms did not pan out.
'Anybody who is familiar with the forex markets knows that these are probably the most efficient markets in the world where opportunities to make money are very difficult to find. Anybody who claims that he can teach somebody how to make money trading forex after attending a course is ignorant of how the markets work,' said the trader, who declined to be named.
The Consumers Association of Singapore (Case) has received inquiries and complaints about such programmes. In 2007, there were seven cases. There were 18 cases in 2008 and 16 last year. So far, Case has received 10 cases this year. They range from complaints about pressure selling to alleged misrepresentation on the cost and benefits of the programmes.
Nine of last year's cases and five of this year's received by Case involved forex trainer Powerup Capital. Other firms included FX1 Academy and Momentum Asia.
Said Mr Seah Seng Choon, Case's executive director: 'Consumers should not be taken in by hyped-up promotions and advertisements. They should take time to evaluate the risk involved before parting with their money to pay for expensive investment courses.'
He added that there is a tendency for such advertisements to highlight rare successes but ignore the more frequent losses. He also advised consumers to be mindful that not everyone is cut out to be a trader, even when equipped with the best tools.
Here's a checklist on what to look out for before you sign up for such courses.
1. Background check on firm
By paying $5 to the Accounting and Corporate Regulatory Authority (Acra), you can get a copy of the firm's business profile report with information on when it was set up, its paid-up share capital and management.
Check if the firm is on the Monetary Authority of Singapore's alert list. Find out the number of programmes conducted in the past and whether there were complaints from past participants.
2. Trainer's qualifications
Ask for the speaker's curriculum vitae and do background checks, for example on the qualifications of the speakers, particularly those who were trained overseas, said Mr Seah.
Check whether their qualifications are from an approved tertiary institution. This could be done at the relevant embassies.
3. Preview session
It is useful to attend the preview of the training programme to gauge how relevant it is. You need not sign up on the spot. Instead, take your time to consider.
Wherever possible, ask for independent views on the robustness of the programme. Besides confirming the cost of the training programme, find out whether there are other costs involved such as reading materials, software and certifications.
4. Endorsed programmes
As far as possible, enrol in programmes endorsed by official bodies such as the Workforce Development Agency (WDA) or reputable organisations such as financial associations. This is because training programmes backed by WDA need to adhere to a specified standard of delivery, said Mr Seah.
5. Sales pitches
Trainers may sometimes use aggressive or pressure sales tactics to get you to sign up on the spot.
For instance, you may be encouraged to sign up so that you won't be left behind or because there is a special offer for a limited period only.
Do not be rushed into making a decision. Take your time to understand the investment tool. You can always follow up later when you have had time to think about it.
Mr Seah said that Case takes a serious view of companies which put undue pressure on consumers. And such vendors could be breaking the law by doing so.
'If the consumers find that the vendors are exerting undue pressure on them or mislead them to attend the seminars or workshops by guaranteeing exaggerated, unattainable or unrealistic financial success and skills from the talk, they could take them to task under the Consumer Protection (Fair Trading) Act,' advised Mr Seah.
6. Substantiating claims
Sometimes, a speaker might refer to past performances to show how easily and quickly money can be made. When that happens, you should ask for substantiation. Ask for proof of the number of people who have benefited from the programme and how much they made. If something seems too good to be true, it probably is.
7. Buying trading software
During or after the training programme, trainers may market software to help you trade in the various markets, be they commodities or shares. But do not be taken in unless there is concrete proof that such software serves your purpose. Make an informed choice and find out the strengths and weaknesses of the software, cautioned Mr Seah.
There are many investment tools in the market, so shop around and obtain independent views on the usefulness of the software.
8. Overseas investments
You should differentiate between investing here and overseas. If the investment is in Singapore, ensure that it is regulated by the authorities.
For example, overseas land banking is not a regulated investment here as the property is located outside Singapore and the purchase is governed by a foreign jurisdiction. Bear in mind that it would be difficult or costly to pursue the matter in a foreign land.
9. All investments carry risk
There is no guarantee that the investment tool on offer will automatically bring success. All investments come with risks. And trading in the markets carries a high risk. The higher the potential returns, the higher the risk. Consumers not prepared to stomach high risks should not get involved.
Also, you should consider whether you are willing to put in effort and time to study the product and whether it is in line with your financial goals.
lorna@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/