I received an SMS from a company called Breck Integrated Investment; they seem to be a bitcoin mining company. They state that they have some type of robot and technical process for investing your money. They then claim that the return on your investment can be up to 65% in 30 days. The minimum one can invest is R3 000, which will then apparently see a 30% profit in one month, making it R3 900. This sounds just too good to be true. So I would like to know if this is legit or a scam? I can’t seem to find much information about this company.
‘If it seems too good to be true, it usually is’ – in this case the adage seems to apply.
The company’s website boasts that R1 million investment would generate a return of 65% after 30 days. If you had to annualise it, it would be a return of 780% annually. If R1 million was invested, and the investment of 65% was compounded monthly and you did not withdraw the interest (or profit as per their website), your R1 million would have grown to around R407 million.
Just based on the numbers, this is impossible to achieve.
Many scams offer higher returns than the general market. Legitimate fund managers with ‘aggressive’ investment fund mandates generally set a benchmark of CPI+6% per annum. With CPI (the consumer price index) currently at 3.3%, the benchmark that it aims to outperform is 9.3% per annum. So when you see investments solicited via social media, phone calls, and text messages offering a return of 15% plus per annum – particularly those that say it will be guaranteed – that’s when you should start to see red flags and avoid it at all costs.
Over the years I have seen many scams that have come to the market offering forex, cryptocurrencies, or some form of ‘sophisticated’ investment structure, where they have the ‘smartest guys in the room’, and because of their ‘proprietary trading secrets’ they are able to generate returns that are unheard of in the industry.
I have recently been in contact with many clients and advisors over an investment that promised 3% per month. I did the due diligence for a client who was looking to invest with the company, and the prospectus and contract had many red flags. The contract noted a monthly commission of 0.5% to 1% per month. The numbers sound low but if you start to add them up – including the fact that the investment return would need to be 36% per annum to cover the payment back to the client, plus another 6% to 12% to pay the ‘advisor’ and then factor in the operating costs – the investment would need to provide a return in excess of 50% per annum.
To put that in perspective, Warren Buffett’s Berkshire Hathaway has produced an annual return of 20.6% from 1965 to 2018. Buffett’s investment track record is considered by many as one of the best over the last 40-plus years.
The company in question’s licence was suspended by the Financial Sector Conduct Authority (FSCA) and now the investors are trying to get their funds back – I believe they will be lucky if they get more than 10 cents on every rand invested.
If an investment is generating astronomical returns, they do not need your R3 000 – they would be given institutional money to run with by one of the big investment houses.
If it sounds too good to be true, it usually is.
The company in question never responded to Moneyweb’s requests for comment.