Here is where I need to be upfront. The industry is full of scams and cheats. No, really. It is cold-blooded out there and greed is always around, leading people to do things against their conscience. There was this once when I was asking for help on a particular platform that used Telegram and in just a span of 10 minutes, received 2 calls from different scammers who wanted to scam me out of my LEDGER phrases!
If you are intending to invest your money, especially for those in crypto, here are some rules you would want to abide by, especially when you are dealing with fund/money managers.
- Never give your crypto or money away to someone else to invest on your behalf.
Once it is out of your wallet, and into another person’s wallet, that person can just walk away. Disappear. Never to be contacted. Or traced again. Always invest through a custodian, like a fund. A known, tested and approved exchange that does it.
For crypto, you can simply use staking to make money. For example, for one of the top and fastest growing altcoins in Asia called Zilliqa, you can stake your Zil and earn a yield of 14%. You can use moonlet.io, zillet.io for the staking, amongst others. They are tested and proven, and reviewed. But beware, because scammers are on a prowl for victims on their help channels!
- Look for independent calculations of value, or claims of performance.
There is a tendency to let someone else do your due diligence for you. If you absolve yourself of that responsibility, you are creating a situation where you will let yourself down at some point. Don’t let someone else make up a track record of investing that you cannot.
Catherine Wood has a great track record. She did more than 100% for her fund in 2020. That is no mean feat. And hers is proven through time. Her ARK Invest fund has to report at the end of each trading day, the stocks that they buy or sell.
- Understand how you will be compensated for the risk you take.
Don’t just look at the bottom line of a fund’s performance. Read the legal fine print. Are the fees reasonable if you are using a fund? Or are the returns miniscule and the fees exorbitant?
- Are the returns repeatable? Can you repeat the results again next year or next cycle? Or is this a one-hit-wonder?
Keep your eyes out for flukes. It is easy to make money in the bull market. How about a bear one? How will your fund profit even in the down times?
- What environment is this investment that you are getting into operating in?
If most funds are making only 10% returns and yours claims a 60% performance in the same climate, same environment, same industry types, your red flags should start coming up, and you need to dig deeper. What is the strategy taken and how will the fund profit from it? How will losses be dealt with?
- Learn how to move on.
Draw down and move on if a fund is not performing. There are no hard feelings involved. These are funds and they exist for one sole purpose. So that YOU CAN MAKE MONEY. You did not go into a fund to lose money or make friends with the fund.
- ALWAYS understand the risks involved.
Every strategy has its risks and returns. Find out possible black swans. Don’t allow yourself to be sidestepped by treating ‘low risks’ as NO risks. There is a big RISK in underestimating risks.
Again, as a disclaimer, all these do not constitute investment advice. Do your own due diligence!
Yours,
Chief Editor
BBA Market Perspectives
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