Too good to be true?

Are the investments being offered to you a little too good to be true? We look at some past examples where people have lost capital through fraudsters and failed schemes, and reveal some red flags you should look out for.

We’re all familiar with the saying, “If the investment is too good to be true, it probably is”, and there is a good reason for that. There is no shortage of individuals, even companies, that will try to sell you an investment under the false promise of large, guaranteed returns – often within a short period of time.

It’s happened before – it will happen again

You may remember the notorious Barlow Clowes case, where around 15,000 people, many of them retirees, were invested in the

By Brett

invested in low-risk government gilts but promised returns higher than gilts were paying.

Equitable Life carries another cautionary tale. This was a reputable company which came un - ers to be caught out when inflation and interest rates dropped, leaving the mutual insurance society struggling to fund its commitments.

In 2009, there was the welldocumented fraud of Bernard Madoff – a ‘Ponzi’ scheme where money from new clients was used to pay older ones. Bernard lured investors through promises of between 10 and 12% annual returns on investment – by the time the US government caught up with him, he had cheated clients out of $65 billion.

These are just a few examples. As long as there are markets, there will be those trying to get rich by selling hope to the less informed. Those taken in by these schemes were intelligent people – victims often of misleading claims by an individual or company they be - said,

“There are some frauds so well conducted that it would be stupidity not to be deceived by them”.

A statement that describes the cunning, charm and resourcefulness of fraudsters, and the vigilance and discernment we must maintain whenever we are asked to invest our money.

Avoid investments that sound too good to be true

Be wary of promises that guarantee high returns. There aren’t any absolute guarantees with investment, and you’ll likely get a lower return the safer your money is. Compare the yields that have been promised with current returns on well-known stock indexes. If the numbers don’t match up, where could such returns possibly be coming from?

Be wary of anyone pressuring no reputable professional would push you to make an immediate decision.

To protect the financial security you have built for you and your family, consult the advice of an expert that is regulated by a reputable authority before committing to any investment being sold to you – and focus on the fundamentals.

You have probably worked hard over decades to build your wealth for you and your family – if something seems too good to be true, don’t put that wealth at undue risk.

All advice received from Blevins Franks is personalised and provided in writing. This article, however, should not be construed as providing any personalised taxation or investment advice.

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AFC Wimbledon have announced a pre-season visit to Alicante Province this summer.

“With the club seeking warm weather training to prepare our first team for next season, we’re delighted to announce plans for a trip to Spain,” declared the club in a press release.

“The Dons will be heading to northern Alicante for a six-day tour in early July - and there will be plenty of incentives to travel to this province in eastern Spain.

“That’s because we’ll be facing EFL opposition in our first friendly of the summer and hosting something that we hope will really whet the appetite for pre-season - an informal event that offers fans an opportunity to meet the squad