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Protecting yourself from financial scammers

People of my generation were raised with some rules to live by when it comes to securing our money from those who want to take it from us. They are still pertinent:

If it looks too good to be true… Be sceptical of what’s being promised and give it a reality check. If someone is offering you a ‘cash’ product with a return greater than typical term deposits or cash accounts, it’s probably not invested in ‘cash’. Also be sceptical of high-yielding property funds, big-promising stock brokers and investment managers who lack an Australian Financial Services License (AFSL).

The greater the return, the greater the risk: Entrepreneurs may want returns of 200% on their capital, but they’re prepared to fail to achieve this. Others may want low yields for zero risk, because they can’t afford to fail. And others chase moderate returns with the risk that in some years they won’t make any gains. Everyone has their own risk-return appetite – once you understand yours, scammers will find it much harder to con you.

Always get a second opinion: I’m amazed how many financial scams could have been averted by the victim seeking a second opinion. If you don’t have the knowledge to test what’s being promised, find someone who does have the knowledge and is independent.

You get what you pay for: Try to avoid ‘free’ or ‘discount’ advice, or investments where fees are waived, an in-house lawyer is provided or a property inspection or valuation is made available by the vendor. Good independent advisers are not cheap but they are acting for you, not for someone else. If you look at just about every financial scam, you’ll find a victim who did not have the protection of good advice.

What’s the rush? You have to sign right now? Why?

Mark Bouris is executive chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting and tax, and insurance.

 


Mark Bouris

Mark Bouris

Mark Bouris is executive chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting and tax, and insurance.

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