Click below subscribe to my RSS


Powered by FeedBlitz

Monday, November 26, 2007

Money Wars - Cash Plus vs Commercial Banks

It seems the hottest topic in the news here in Jamaica is the financial civil war that has erupted in the past few weeks! It is such a hot topic that it has even almost overshadowed the Local Government Elections that will be held shortly.

Of late many more ordinary Jamaicans have opted to invest their hard earned money in high yield alternative investments schemes in a bid to earned tangible interest on their principals. One of such investment companies, is the locally popular Cash Plus Limited. This investment company is one of several high yield investment companies that have been termed as risky and unregistered investments entities by the local commercial banks. But why have the ordinary Jamaican, despite the many warnings, leave the apparent safety of the commercial banks to gamble their hard earned money in such risky investments?

Well, my answer is just a layman's answer, not the reliable comments of a financial analyst. Times are hard, many Jamaicans are grossly underpaid, inflation is growing at an alarming rate, the dollar is devaluing every day and the same commerical institutions are offering little or no help to the ordinary Jamaican. But why would I say the commercial institutions are not helping? Well if we compare the the interest charged on loans with the interest paid on savings, there is no wonder why the top management of such banks can get seven digit salaries while your money seems to be growing only from your own input. I may be corrected on this, but the average interest paid on savings rarely goes above six percent per annum, while the interest charged on an ordinary almost never fall below seventeen percent per annum. There is no wonder why an interest rate of ten percent per month would seem attractive enough to take a risk!

As a result, many Jamaicans have taken the leap of faith and have been withdrawing their savings and deducting from their monthly commercial bank savings to take a leap of faith and invest in Cash Plus. This has definitely not gone down well with the leading commercial banks which have launched an all out assault on these alternative investment options, including the famed Cash Plus! It seems the commercial banks attacks started with harsh warnings to the public, which escalated into pressuring the government to act, however, these actions have seemed to do little to quench the publics fire for Cash Plus. This would not deter the banks as the have resorted to dishonoring checks to and from institutions such as Cash Plus and OLINT, considering closing the accounts all accounts relating to these "unregistered institutions" and reports are that they have even gone as far as threatening their own staff if they are found to be investing in entities such as Cash Plus. However, Cash Plus has been vigorously attempting to assure its investors that this latest move by the banks will no bring the company and its subsidiaries down, through the printed media and mass meetings and have begun to explore other means of paying their investors their returns. [read story]

Who will win this war? Will the banks succeed in bringing down these investment companies, or will companies like Cash Plus and OLINT grow ever stronger? Will the banks actions reestablish themselves as the investment option of choice or will their actions bring an unwanted backlash? As the missiles fly across the battle field, only time will tell. What are your thoughts on this financial war?

10 commented:

I say more power to Cashplus, i'll be taking advantage of a comercial bank loan (payrollplus) just to drop the money into cashplus as thats the only way to earn anything good from savings right now.

I dunno..depends on the interest the others are offering..Then i would decide if it sounds too good to be true

well my take on it is this if David Smith left JMMB to do what he was doing for JMMB for himself and is able to pay between 10 and 14 % per month on US$ then we need to ask ourselves is what JMMB tek our money and was doing with it and then turn round paying us only 16% per annum i have quite a bit floating around out there and right now i pulling some of it to take a chance with the monthly guys hell why not. Know this police who 5yrs ago invested all of his retroactive pay which was couple million into cashplus and now he owns 3 houses ...not cheap ones either rides in a 40,000US$ car and collects $600K of monthly he recently dumped all of 31 mil on the 5yr account .. guess we will see

I know that when it comes to investing diversification is what makes sense. It's like the old saying, don't put all your eggs in one basket.

And "high yield" investing is like a high stakes card game. It's for the rich.

At risk of sounding like a boring old fart... When will everybody realise that Cash Plus is nothing more than a Ponzi Scheme. A well run one, I will give you that, BUT, everybody who has cash with Mr Hill and his company WILL lose it, unless they take it out soon! A Ponzi scheme for those of you who do not know, relies on new investors' deposits to pay out the ridiculously high rates of return to the existing ones. Whilst new people deposit money with Cash Plus, so they are able to pay out the old members. As soon as the number of new members dries up, so the scheme collapses and Mr Hill will be heading for the airport. THese schemes work ok for early investors. In fact I know many people too, who have made a bucket of cash out of both OLINT and Cash Plus, BUT, the uninformed man on the street is going to be screwed. All those Jamaicans, that Cash Plus say they are working for WILL LOSE. The bug guns are already out, take my advice and get out while you can.

For further info on a Ponzi Scheme and how it works visit:

I think it's a "fight 'gainst" situation.

What is done with the money to generate the income to pay the interest is of great concern. If interest is paid by new investors then we have a pyramid/ponzi scheme. But if not then why try to cripple it? Let it die a natural death if that is its fate. Don't force an early demise, not after the poor ppl who tryin to keep their heads above water have finally found a solution (albeit shaky).

It's not that they are getting rich off it. The majority have just about the minimum invested and a minority (including those who are calling for blood and casting the first stone) have di big money in there and have pulled it or enjoy it's remittance to off-shore accounts.

Bottom line is that Cashplus and other Forex entities are still high risk and since you accept that risk if it go down, don't bawl to Government! But don't force it down true badmindedness!!!

I knew this was coming, from the minute I heard about Cash Plus. This reminds me of the war between C&W and Digicel back in the day. But eventually they'll have to back down. I know the Gov't isn't gonna pass any regulation to stop Cash Plus, as I hear some politicians have money in there!

If they've got someone like Seaga on their Board, dat mean nuff credibility.

i admit i dont really know all the intricacies of these forex entities BUT i do wish i had a drop of money to put into some...after u've made back ur money there no real loss to bawl bout...and it seems most of them have been around long enough for most people to have made back their initial investment.

i think i'd still invest in cashplus all be it the grandfather of them all (so it seems to me who has done no research) for this same reason, they seemingly not going nowhere...i'd invest in a newer one too tho cus i do think its the new investors who stand to gain more in these schemes.