“Were you scammed?”
One of the funny things about finding a rare opportunity is…
No one believes that it is possible.
After all, we’ve been taught that if something is too good to be true, it is definitely not.
And truth be told…
I’ve been exposed to many different programmes and schemes over the years. I even flew to Nanning, China, for what I believe is one of the biggest scam operations I’ve ever encountered.
But when it comes to investment, it’s a different story.
Why?
Mostly because investment has always been associated with the financial institutions.
And they are someone we can trust, right?
Not if you’re a follower of the whole Gamestop short-squeeze episode and believes the financial institutions and the “system” is rigged to support only the rich.
Countless economists and investment management firms have warned that this one single “market manipulation” could lead to the market crashing.
So, given the grim outlook…
It’s no wonder that so many people don’t believe it’s possible to make any decent money from investing.
The Dark Side of Scams
Even here in Singapore, we hear stories of people who lost their entire life savings because of such scams.
Just last week, The Straits Times reported a story of a man who had befriended a woman on Facebook and opened a trading account with a broker she knew.
Unfortunately, he was one of 200 victims in this particular event.
That’s why, as untrained investors, it is important for us always to do our due diligence.
Do some research, understand how the system works, what the risk management steps are, and why the company is providing this opportunity.
And once you’ve done your analysis, it’s always best to start small and always at an amount you can comfortably afford to lose.
In most cases, that amount would be about $1,000 of the investment currency.
For people who can’t afford 1 grand… investment is probably not a feasible option for them now.
The last thing to ever do is invest your life savings.
Because ultimately, investing is not like starting a business.
In a business, you’re in control of how hard you choose to work.
In investing of any kind, the market is still in control.
The Gamestop story is one such example.
No one could have predicted a simple Reddit thread would blow up and storm the financial markets.
Within a single day, the share price shot up and had such devastating effects.
Start Small and Invest for the Long Haul
If you’ve read some of my other investing posts on this blog, you would know that I advocate starting with a smaller amount and let that money compound.
Sure, it is a slower approach, but the goal at the start is to test the platform out for yourself.
Transferring money out should be simple, and most importantly, you should never feel hostage to the platform or the broker.
Here’s a screenshot of my 2nd month results (Jan 2021) which you’ll notice a few things.
The starting amount of -$25.30 is the profit of the previous month.
At the end of each month, the total profit is less off from the account and transferred back to the platform’s profit wallet.
To take advantage of the compounding effect, I would need to transfer back the amount into the account manually.
However, because of this particular platform, it requires a minimum of $100. As a result, I couldn’t tap on the compounding effect for January.
Instead, if you notice the end of the table, there was a withdraw of $102.44. That’s the profit on the account for January, which again was withdrawn to my profit wallet.
However, this time, I transferred back $100 to allow the platform to roll the money over.
While this might seem small, there are a few things to remember about this account:
- The capital is only $1,000, so a $102.44 profit is a 10.24% ROI
- By leveraging on the compounding effect, assuming the ROI is constant for the next 11 months… by the end of the year (Dec), this amount would potentially grow to $3,214.58.
I’ll probably write another article to explain how the compounding effect and time value of money works…
But the important point to take note is…
It takes time to grow money through investment.
But with the right strategy in place, this same amount could potentially grow to $107,481.97 in 3 years, assuming the same monthly ROI and that no withdrawal was made.
But What’s the Catch?
Now, earlier I mentioned about understanding the motive for the trader and their company.
Why would anyone want to trade for others when they could do it themselves?
Well, the answer lies in the volume.
Smaller traders don’t have the luxury of having big clients with hundreds of thousands of dollars portfolio.
So, since they can’t get big players, their other option is to get many small players.
Players like you and me who are investing a few thousand dollars.
But with the volume, this adds up.
Still, you’re probably wondering…
How do they benefit from this?
Through a management fee.
This platform runs on a system known as Percentage Allocation Money Management or P.A.M.M for short.
The trader trades on his own account but at the same time…
He has control of all our individual accounts.
So, unlike copy trading where the investor is responsible for entering or exiting the trades… here the trader does all these for us.
This reduces the time difference risk of copy trade where we enter or exit a trade a few seconds or minutes late.
In return, a percentage of the monthly profit is deducted and paid as a management fee.
That’s why there is the monthly profit withdrawal back into the profit wallet.
The Risks of Such P.A.M.M Platforms
Naturally, there are risks when you choose a P.A.M.M trader as well.
The first is that the trader might not be that good… the trader I’ve shown on this blog has a historically been achieving around 13.36% on average.
Some months may be lower and other months higher than this figure… but when average it out its about 13.36% so far.
The second risk is that the trader might decide to stop trading one day.
There’s no control over this as traders are human like you and me. We can never tell when they might decide to retire.
In this platform, it is operated by a company which selects the two traders.
So, while we can assume that they will continue to replace the traders if any of them ever retires…
Just like the power of compounding… it is best to take action fast.
If you would like to learn more about this platform, I’ve created an interest registration page to share more details about getting started and other things to take note of.
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