Investment is a form of committing money to an asset or a commodity with the intention of making profits in the near or far future. An investment allows a person, to invest in a property, company, commodity etc. and gain profit over time. At times the profit would be enormous which depends on the investment made.
According to Global Investment Report 2017, UAE is the 21st largest country in Foreign Direct Investment(FDI) destination. The UAE is a market every entrepreneur, merchant, and investor would like to invest into, with significantly large returns. Moreover, Dubai being the City of Gold, every place you invest would return huge profits. Starting on a positive note, for a short term investment, a fixed deposit is preferred, while a property investment is preferred for great long time benefits. There are fields such as shares, business, etc. which can earn the investors good returns; at the same time, there are certain places, where investors need to pause and rethink before investing in UAE.
These places are filled with risks, and it may not always be wise to put your money at a place, where you risk to lose all of it. Here are some places to avoid investing into:
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Foreign Exchange Scheme:
In this scheme, the dealer would let the investors invest some money in some foreign exchange market by promising huge returns. Unfortunately, in such schemes when one investor sees a profit, another experiences a loss for obvious reasons. This is nothing but Forex scam where people lure you into believing in a false scheme and eventually causing you to lose money. Few Forex merchants even suggest he Forex as a low-risk investment with high profits.
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The Ponzi scheme has been named after Charles Ponzi, an Italian fraud businessman. He started this very famous investment scheme which collects money from new investors and uses that money to pay returns to old investors. The scheme works perfectly as long as people don’t mass-withdraw and/or the company doesn’t run out of investors. Running a Ponzi-style company is a federal crime in most countries of the world.
This is a traditional investment scheme where an organization receives investments from the investors and provides them profits if they get more investors to invest. This is quite similar to Ponzi Scheme, but here an investor needs to get one more investor and that new investor needs to get another investor and this goes on. And each investor would be paid if they get a new investor. By the end, there won’t be any investors interested, and the existing investors would slowly lose money without tasting any actual profit themselves.
Pump and Dump:
The p&d scam is another common way of fraudsters looting unsuspecting customers, where a set of scammers would let investors invest in a useless stock and when the stock prices soar high in the stock market, they would sell their shares. Another way of duping involves tricking the investors into putting their money in a stock that’s going down, citing promises of great returns. Usually, such companies offer a high commission to agents in order to attract investment. Once the new investor buys the stocks, the stock prices fall eventually, which would result in scammers earn a lot of money and the investors with a loss.
This is something one would experience more often. It can be from any source like emails, message, online advertisement, etc. The fraudsters would show up some fake organization which has no earnings at all and ask for investment, and then finally there won’t be any news from the organization whatsoever. Or it could be like they offer you so much for nothing other than just a few basic details.
Investments are tricky job be prepared to find people trying to lure you into believing large returns. Always remember, when it comes to money, “If something appears too good to be true, it is too good to be true.” One should do proper research before investing in any organization or stocks etc. and should talk to people who have a handful of experience investment money. Also, a wise man doesn’t put all his eggs in the same basket. Being a coward with your money is the best course to avoid losses.
“I never invest in anything that I don’t understand,” said Warren Buffett. Follow these few tips and enjoy Investing.
About the author
Nikitha is a Senior Analyst at MyMoneySouq.com. She has been writing about personal finance, credit cards, mortgage, and other personal finance products in the UAE. Her work on Mortgage loans has been featured by the GulfNews and other popular Financial Blogs in the UAE.