Get in now! Don’t miss this opportunity! My mates are all doing it! Make a Motza on this deal! Once in a lifetime opportunity!

Ever heard this before???

Well I hear it about once a month… that and other awesome deals that investors are going to become filthy rich overnight… Honestly!!!

I always laugh when I hear it and tell them to run for the hills… these investments never come off… but yet they still proceed with the tiniest chance they may make a quick buck.

To put it simply – if it sounds too good to be true, it probably is!

These investments may be in the form of:

• Property syndicates
• Shares in property developments – especially of you have never done one
• High return cash deposit funds – even if backed by registered first mortgage
• Property Trusts
• Tree farming
• Speculative shares in big volumes
• Land banking – in the hope the land will be worth subdividing in 7 years
• Pyramid style schemes – or more recently known as Multi Level Marketing Schemes ( there’s that scheme word again… )
• Penny Auction Sites

Plus many more being scammed up on a weekly basis

These investments are usually sold by a slick dressed, pushy salesman chasing a fast buck and looking for investors seeking the same. Worst still they are sometimes offered by friends or family… More often than not they fail and the investor loses large amounts of cash or their entire life savings and/or their home. What a great way to lose a good friendship…

More often than not these salesman want investors to put their money into a pooled environment and when the deal makes millions they get a nice slice of the pie… but have you ever thought as to why the salesman doesn’t put his own money into the pool of funds?

Now don’t get me wrong, some property syndicates and property funds can be a lucrative investment but if the proposed returns look like 18% and upwards… then I must question the validity of the fund. And remember, past returns are in no way any indication of what can occur in the future.

High cash accounts backed by registered first mortgages must also be researched in depth. Many non conforming mortgage companies raising funds backed by Registered First Mortgages have gone bankrupt. The problem you have as an investor is that you have no control over whom they lend the money to. The reason they offer such high returns is because they also lend to high risk investors and developers whom cannot obtain finance through the usual channels. If the property market turns bad, then they cannot make repayments on the money you have lent them and hence you make zero return and often lose your initial capital.

If Land banking has presented itself to you, then you really need to research and buy demographers reports. This style if investing is a huge gamble… you are essentially hoping that the farm you have purchased will be in the right part of town where a town is expanding. Get it wrong and the land is worth nothing and unsellable. They are generally long term investments where you receive no return on your capital until the block is either sold on or subdivided.

Pyramid selling, well that is self explanatory… and Penny auctions are online auction sites where you bid for an item… and I will let you Google them and make your own call.

I was offered one of the above schemes a few years ago by my accountant at the time (not any more though..) of all people? – the person who was supposed to be advising where to invest wisely… so I asked, how many did he have? And his answer was a stuttered “uh oh none yet”… So.. why would I put my hard earned money there?

In the current economic climate, huge returns are a thing of the past… into the future I believe we will see nice steady growth from shares and property but not massive increases like we saw in the WA property Boom days…

When I recommend property locations to clients, its because I already own property there and believe it is a great affordable location that will make them a nice return…

We have a short window of around 40 years to make sound investment decisions and create a lifestyle that will see us through our retired years. One mistake like this can ruin you for life. Sorry if I sound like I am preaching but I hear about so many and I am offered these scams all the time…

If you do go into one of these scams then be prepared to lose what you have put in… and if you lose… well I’m sorry but you only have yourself to blame… it’s your money, so spend it wisely.