Invest in cooperatives not in pyramid scams

MANILA, Philippines - “Pyramid scams come and go. It doesn’t end there for they come back in another form,” says Salvador Napa, a staunch proponent of cooperativism in the Philippines for almost several decades.

It’s easy to detect a pyramid scam. First, they offer high yields, like double your money in two to three years, five percent per month (like Multitel) and at one point, even 2 percent/day (like FrancSwiss). Second, they really don’t have business or financing activities that can actually give you that return.

“As to the latter, they may make vague claims as to how they can guarantee such returns for in fact they are just paying earlier investors with the investments of newer investors. Eventually, when new investments are not sufficient piling up obligations, they close shop and late comers lose their money,” Napa explains.

“Even traditional pre-need companies also incurred financial problems lately. While they are not scams, the problem lies in the fact that their commitments were based on assumed investment returns that are no longer viable given the low yields trust funds are able to give, among other reasons. However, Napa says, not all pre-need companies are the same. For one, some offered inflation-riding educational plans, while others didn’t.

“One option the ordinary Filipino nowadays should consider is investing their money in savings or credit cooperatives, provided, of course, they don’t promise very high rates. With our First Country Cooperative, for example, wherein I presently serve as a director and membership chairman, you can be a member with savings as small as P300,00/month and eventually members get to borrow to the extent of their investment or deposits,” Napa said.

Since loans are collected usually on a daily basis, their cooperative can justifiably charge good interest rates sufficient for it to be viable. They also benefit even if they don’t borrow. “Since you are a member, you enjoy group rates on term life, accidental and in some cooperatives, even hospitalization insurance. You virtually enjoy these benefits for free,” Napa pointed out.