Hey everyone!! I found an investment with guaranteed returns! Yes, you are reading me correct. GUARANTEED! Let’s dive deeper and see if we should invest in it.

This was brought to my attention by a close friend who saw it on Instagram (I am not active on Instagram)

When I first saw it, I was super intrigued! Because it combines the two loves in my life! Investing and Durian.

That’s right, this is an investment with guaranteed returns based on durians.

How it got started?

Apparently, a Singaporean Instagrammer started “promoting” a durian seedling investment. You can read about the details in another blog here.

Let’s take a look at the description of the Instagram post regarding the investment.

“A lot of investors are turning to MSW durians because they’re investments with INCREASING returns (tested and proven through experience and study)”

“If you’re looking to start with a small minimum investment with high returns, 99.9% success rate, long term returns (till 2068)”

Rather than slamming the Instagrammer or debating whether their durian is nice or not, I will try to do an objective assessment and treat it like this is a potential investment.

1. “A lot of investors are turning to MSW durians” – This is one of the most common fallacies in investing. When she claimed that many investors are turning to durian as an investment and therefore you should too, it is a statement of FOMO. On the contrary, I believe this will be an investment of diminishing returns. If many are rushing to a specific investment, you are most likely NOT able to gain from it because the profits will be split among MANY investors. Imagine your cake (profits) is split between more and more people. Furthermore, when many people are rushing to something, it is often the hype of the cycle. Basically, YOU ARE TOO LATE! (ok I admit this part is not very objective of me too)
2. “Tested and Proven through Experience and Study” – This is interesting because as an engineering graduate, I was always thought that ideas or thesis are tested and proven through conducting experiment and gathering evidence, not experience and study. Ok… study does sound like gathering evidence, but I wonder what kind of study was done on durian trees in relation to its returns on investment. So I would be cautious here until some evidence or detailed studies are shown.
3. “99.9% success rate” – This is the red flag for me. I called this kind of behaviour: “I don’t know my stuff so I give a ridiculously high number to convince you“. How is she even certain that the success rate of the durian investment is 99.9%? Why not 99.999999999%? If she said that, I will be more assured since the higher the decimal place, the higher your confidence level right? Ok, enough sarcasm. But honestly as an investor all these years, I have never come across any legit investment that claims 99.9% success rate in returns. Even the government bonds won’t guarantee you that.
4. “Long term returns (till 2068)” – Now, 2068 is about 50 years from now (2018). Honestly, if you ask me whether I will still be alive in 50 years’ time, I won’t be 100% sure that I will be. Not because I am unhealthy or ridden with diseases, it is simply because 50 years is FREAKING long time! So many things can happen and I am not sure! In fact, no one should be able to say for sure what will happen in the next 50 years. Once again, I bring in the government as an example. The longest government bond that you can purchase right now is 30 years bond. Why, I wonder? Maybe because the government also doesn’t dare to guarantee bond returns beyond 30 years? Go figure.

Good Practices for Any Investors

One thing I must admit is that I haven’t read enough on this investment yet but I just want to share some good practices for investors when facing potential investment opportunities:

1. How are the returns guaranteed? – I tried to look through the contract documents but I couldn’t find a satisfactory answer. There are so many uncertainties about investing in durian! Such as weather, soil, water, plant diseases etc (trust me, a family friend also runs durian plantation). What if the harvest is bad, who will guarantee my returns? Usually, guaranteed returns are done through the use of a Trust. Basically, the company that is guaranteeing investors will set up a Trust with money deposited which can be used to provide the guaranteed returns when the actual return is bad. Now why use a Trust? Because THEY DON’T TRUST EACH OTHER.  In this case, I couldn’t find any wording of a Trust set up in the contract. The only thing they asked you to do is to TRUST them and take their word for it. I know the instagrammer said that she trusts her dad, and I am sure she does. But sorry, he is not my dad.
2. Is there a conflict of interest? – In her post, she said: “If you know me, you know that I’m very very very careful with my savings and I’m not the type to splurge mindlessly. So if I dare recommend an investment to others, you know it’s gonna be good“. Of course, we can take her word for it but always ask: “Is there a conflict of interest“. This means does she stand to gain anything if you invest in her recommendation. Apparently, her father is managing this durian investment as a consultant (honestly what does that even mean?), so without digging deeper, I would venture to say that there may be a conflict of interest. There is an old saying: “Never ask a barber if you should get a haircut“. So when there is a possibility of a conflict of interest, I will be very wary.
3. Is the person an authority in the area of expertise? – This is perhaps the most well-known marketing strategy/ gimmick out there – Appeal to False Authority. Very often, we will see famous individuals on advertisements for products like cars and shoes. This is to “trick our mind” as we will immediately associate the famous individuals to the quality or usefulness of the product, although they have no direct correlation to each other. For example, if we see a poster of David Beckham using a new cologne, our monkey brain might be thinking: “Hey, I should use that cologne too! Because David Beckham uses it too. It must smell nice!” While it is alright to succumb to this gimmick when buying your bodily odour, it is totally NOT alright to succumb to it when investing! So ask yourself: “What has a pretty Instagrammer got to do with DURIAN INVESTMENT! Does she have the relevant experience in investing for you to trust her judgment?” In short, Is the person, recommending you the investment, an authority in the area of expertise? In another universe, if Warren Buffett were to recommend this durian investment instead, I will look at it very differently because I know Warren Buffett is an authority in investing! (to be exact, over $80billions worth of authority). By the way, did you trust me earlier on about durian, when I told you my family friend runs durian plantation? You shouldn’t have…

Last Comments

I think that such investment schemes will always be around and in fact be on the rise as I observe around me. Investors should be very wary of potential pitfalls and always serve to protect their money. After all, no one cares about your money more than YOU! Anyway, the last time my friend bought into trees, he got really burnt. So do your homework well before you buy into another type of tree.

Disclaimer: I do not hold any investment in durian seedlings or trees. I have no business relationship with any company mentioned in this article. But I might buy some durian for personal consumption in the next 72 hours. So I may be biased in my views.

See you soon!

Investing Always,

Pete

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