High interest investment options have been with us, it seems for some time. However, there have been notorious failures, among them the failed banks that led to the FINSAC take-over in the mid-1990s and the partner plans, mostly based in western Jamaica, which led to severe social dislocation when they failed.

In both situations, there was a rush of people trying to access their treasured funds when the organisations with which the money was entrusted folded.

These days, there are high interest payout set-ups which offer anywhere from 10 to 15 per cent per month on the money which is invested in them, with many Jamaicans putting not only their savings into the investment ventures but also liquidating assets in order to access the extremely high returns.

Investors beware

Senior accountant Rosemarie says that those who are considering these investments should be aware of the risk. "You can't stop people from putting their money where they want it to go and neither can you force them to put it into what you consider to be a sound investment; you can only advise them, based on your experience and analysis of the current situation," she said.

"As in anything, those who gain the most or lose the most are those who dare greatly; those who take the greatest risk," she said. "A 10 per cent return per month, which means that you double your money in under a year, is incredibly high. That means that the risk is also very high and of course, these schemes are not covered by the deposit insurance that was established after the financial sector meltdown in the mid-90s."

However, she cautioned that while a 10 per cent return per month on an investment is not impossible, sustaining it is the problem.

"If you consider what a car is bought for in the States and what it is sold for here, you can understand why so many dealers can afford to have vehicles sitting on the lot, because they make enormous profit on one unit," Rosemarie said. "But it is not every month that they are going to sell even one car. There is lots of competition."

There is also significant competition for persons to put money in the high interest rate opportunities and Janine, a 33-year-old teacher, is one person who is taking her chances.

"On a teacher's salary, it is hard to look down the line and see where you will be in a comfortable position at 50 and that is when retirement will be only 10 years away," she said. "I have to try something and if my little savings can come up to something in a short space of time, why not try? Nothing tried, nothing done," she said.

And Norman, who has dabbled in the stock market for some time, says the key is the businesses that the persons who run the high interest options are running. "Look at the statements of the banks when they come out. Look at how much money they make and they are not really operating businesses. Then look at the places that sell car parts; they are running up to 50 per cent, 70 per cent raw profit on one item sometimes."

"You know it is a chance you are taking, but apartments and other real estate, they turn over more than 100 per cent sometimes," Norman said.