LETTERS: Last month, the nation was shocked by the news of a retiree, 63, losing nearly RM5 million to a scam after she had responded to an online advertisement.
Scammers' tactics are familiar. They lure victims with promises of high returns, coax them into opening an investment or trading account, and show impressive (unrealised) profits.
However, when victims attempt to withdraw their funds, the money vanishes.
Despite the Securities Commission's efforts to combat scams and raise public awareness, people continue to fall into these traps.
The commission's 2023 annual report reveals that the primary channels for scams are social media platforms.
Scammers are transitioning from mule bank accounts to e-wallets and cryptocurrency.
Scammers have become more creative, disguising their scams as job opportunities, such as liking social media pages or writing reviews.
Another trend is scams through dating apps, where victims are lured into romantic relationships and then manipulated into transferring money to scammers' account.
Scammers will claim to be an authoritative figure to create a sense of urgency and fear.
Be wary of words or phrases like "lucrative", "instant returns" and "guaranteed returns.
In a 2024 report titled "Understanding Vulnerability to Investment Scams and Preparedness for Retirement Planning", the commission reported that 70 per cent of those susceptible to scams are experiencing financial distress.
Financially distressed individuals are prone to psychological distress.
The same report reveals that the majority of those who belong to the susceptible group are highly educated: 49 per cent hold bachelor's degrees, while 23 per cent hold postgraduate degrees.
This suggests that cognitive ability does not shield us from scams.
So increasing our awareness of scam tactics, vigilance and financial literacy is crucial.
From a financial literacy perspective, embracing basic investment rules may help avoid scams.
People are lured by potential returns when it comes to investment products. They should think about potential losses first.
Before committing to an investment scheme, though, we must always ask" "What risks do I have to bear by investing in this scheme?"
Conducting due diligence may save us from future regrets. When in doubt, do research, and if we are uncomfortable with the uncertainty, it is wise not to commit to an investment scheme.
Avoid investing all your money in a single account.
An ideal portfolio consists of highly uncorrelated assets, that is, assets with different risk characteristics that can cancel each other's risks.
In the journey of wealth accumulation, there is no such thing as "guaranteed returns".
DR NURWAHIDA MOHD YAAKUB
Assistant professor, School of Social Sciences, Heriot-Watt University Malaysia
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times
