Don’t get caught up in these Australian money traps
What emotion drives us at times when we are vulnerable and that often leads to financial disaster? If you said fear, you would be almost right, that is secondary. The thrill that scammers and defective product promoters play with is greed.
The poor – that is, most of us – often have a windfall fantasy fantasy. And when that fantasy is presented in writing (via email), no matter how implausible it may seem, we want to believe it. Someone in the world has written to us claiming that: a) we can help them transfer their millions to our bank account while receiving an inheritance, b) we have won a lottery and we only need to pay some fees to receive it, or c) there are some small business stocks Americans to buy that will prove profitable.
As we’ve seen lately on Australia’s 60 Minutes and Current Affairs shows, these kinds of email scams are run by nasty guys in Nigeria, Thailand, and other poor nations, sometimes with links in Australia.
A trap for fixed interest-loving retirees
Another type of trap masquerades as a good investment. I am referring to the promoters of unsecured notes and mortgage obligations that offer a high yield fixed interest. You may have read about the collapse of Westpoint, Fincorp and the Australian Capital Reserve. There are still many other similar companies operating in Australia, all not rated by Morningstar.
The product looks like a term deposit and is touted as a “brick and mortar” investment. But there are still retirees who know little about the product they are investing in. They also fail to realize that their investments are barely keeping a very poorly structured company alive, and advertising takes a quarter of all profits just to bring in more money and keep it afloat (as was the case with Fincorp before it was launched. sink). Fincorp’s unsecured note holders are owed a total of approximately $ 23 million, which is gone, and secured note holders are owed a total of $ 178 million, and can see around 30 cents on the dollar. .
While $ 1 billion of investor money was cut in the collapse of the three companies, what about the remaining $ 8 billion in high-risk obligations? If ASIC cracks down on the promotion these other companies do, they may also pull away like a house of cards.
While ASIC’s FIDO website has warnings about all manner of scammers, schemes, and unsafe investments, sometimes these financially unrated companies (with their television and newspaper advertising) and financial advisers with greedy pockets get the attention of investors first naive.
Do not let that happen to you. Make sure what you are investing in by doing your own research.
