Highlights in this issue:

*** Have you been targeted by “boiler room” operators…
*** 7 ways to escape sudden death…
*** Discover why a property investor with a plan always wins...

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From the pen of Karin Iten…

Dear Investment Academy Reader,

Just last week my uncle was sent a letter from Financial Services Authority in the UK. This letter has the following ominous headline: “This is a Warning – You may be Targeted by Fraudsters”.

Apparently his name is on a list currently used by share fraudsters, commonly known as “boiler rooms”.

“These fraudsters,” it goes on, “may contact you by telephone with offers to buy worthless shares.”

Given that my uncle died ten years ago, they’re likely to get very far in his case. But that doesn’t change the fact that these boiler rooms have been a persistent blight for many years – and I hate them with a passion...

I hate them because they strip honest, trusting folk of their hard-earned savings. I hate them because they are run by greedy, heartless, ruthless shysters. And I hate them because they give a bad name to the very worthy and sensible practice of investing in small companies.

Boiler rooms are generally set up in some off-shore location, beyond the reach of the boys in blue. They are populated by sharp young men whose job is to ring up the unwary, spin some exciting-sounding investment opportunity, then persuade them to part with their money. After that they hear nothing…

Today, I'm blowing the lid on the despicable work of boiler room fraudsters

In the US and Europe, gullible investors pump millions of dollars and euros into dubious financial schemes. These scams are often based offshore and the investors only discover, much later, that they were victims of a scam. Among these scams are those offering secret Swiss bank accounts and others offering full “legal tax avoidance schemes”.

The best advice we can offer is to avoid operators or companies you’ve never heard of. Always check the credentials of the agents handling your money and of those who claim to be from reputable financial institutions.

Don’t be taken to the cleaners – Be prepared and avoid:

*** Cold calling, whether in person or by telephone.
*** Direct mail shots sent by companies or individuals you’ve never heard of. We all have names and addresses on mailing lists which are rented out to “good” and “bad” alike.
*** Small advertisements usually found towards the back of magazines. Unfortunately, it’s impossible for publications to check all advertisers.
*** Get rich quick schemes recommended by friends or even relatives who claim to be making BIG profits themselves.
*** Any schemes you can’t work out the mechanics of yourself. Never allow yourself to be bullied into investing. You’re just as smart as the sales person selling you the scheme. If you can’t understand it: Stay away from it.
*** Anyone who always repeats the words “TRUST ME”.
*** Almost anything linked to a Nigerian connotation.

Never be swindled out of your money!

The South African experience of portfolio management, both domestically and abroad, isn’t what it should be. There have been outright swindles and some institutions that treat their clients as telephone numbers and addresses, as apposed to individuals with specific needs.

If you’re serious about making money, shop around for the best brokerage to suit your needs. Ask for brochures, visit websites, call for information and fill out questionnaires. Yes, this process could be time consuming and yes, the brochures might ask very detailed questions about your finances. But, by taking these steps and answering the questions, the financial adviser is able to learn more about you. And will be more likely to make a special offer on your behalf.

Don’t fill out questionnaires unless you’re satisfied with the credentials of the portfolio managers. Don’t choose your portfolio manager simply because they charge the lowest fee. Some salesmen are hungry for commission and make the bulk of their money by placing yours in their favour.
Where to find safe offshore investment opportunities

Once you’ve selected the portfolio manager that best suits your needs. You need to identify what investments you’re interested in. Unless you have really good connections, we propose you choose one of the British controlled havens such as Jersey, Guernsey or the Isle of Man. Switzerland, Liechtenstein and Luxembourg are also highly recommended. If you’re looking to the Far East, look at Singapore and Hong Kong.

The main reasons for suggesting the Channel Islands are because of easy communication, easy access from UK and Europe and the similar time zone. These islands are home to many of SA’s offshore businesses and have experience in dealing with South African investors.

Always remember, the nature of the account you choose will depend on the purpose of the investment and the level of access to your money you require.

Hope this helps.

Here’s to your financial freedom

Karin Iten
for the Investment Academy