-Investment markets - very interesting
-Writing - two books so far, and weekly articles for NZME regional newspapers.
My father lived to be 100 so with that sort of longevity, perhaps I better keep working for a while yet.
Greed and egos
My colleague then asked what I don't like about my work. I quoted a leading financial journalist who told me the trouble in financial circles is greed and big egos.
My colleague (a wise old head) said that is not at all surprising since money has attracted the greedy throughout history.
Who can you trust?
I must emphasise that there is a lot of good in the industry, and the purpose of this article, (and those that follow it), will be to try to help ordinary Kiwis figure out what investments they can trust.
And by necessity we will discuss investments you can't trust as well.
So who is greedy?
There are those one-off Ponzi-scheme operators who have a very smooth line and can even get lawyers and accountants to invest big sums with them.
Then there are big institutions whose primary focus is profits, profits and more profits, leaving very lean pickings for you.
Then there are a few around the fringes who glean the trust of the elderly, and sadly steal their money.
Ponzi schemes
Your friend Mark tells you he is getting 30 per cent per annum from this broker/adviser/money man that he met in a bar/caravan club/golf club. It is "exclusive" and not everyone can get in.
You are suspicious, but Mark assures you he is getting paid the 30 per cent at 2.5 per cent a month. Nice cashflow.
Wow, you say, maybe I am interested.
After a lot of talk, and a meeting with Billy the broker, an amiable but persuasive fellow, he decides you are a nice fellow and you can become an exclusive "member" with a minimum of $100,000, usually $200,000 to others.
Billy the broker has to get the promised 30 per cent from somewhere, but he can't and anyway he has spent a lot of his members' money on fast living.
In desperation he uses Mary's money to pay Mark, Mark's money to pay Jill, and Jill's money to pay Sam.
Your money will also be used to pay the person who joined the scheme after you, but initially you won't know that.
And then eventually everyone's money runs out, Billy the broker can't repay anyone, and it all crashes.
Too good to be true, of course, and it should never happen.
But it does, again and again. Billy goes to jail but that doesn't get your money back.
Tip No1: Too good to be true.
Tip No2: Don't invest in anything exclusive.
Tip No3: Don't invest in anything that is not widely known or well established.
The FMA
The FMA regulates markets and participants in NZ, and has some teeth, so much of this bad behaviour is no longer possible.
Although it can't be everywhere, it does eventually catch Ponzi fraudsters - but often only after a lot of money has been lost.
But it can't regulate integrity and greed.
Tip No4: You can't entirely rely on the FMA or the Government to protect you.
We will develop a checklist
We could probably write 20 to 50 articles on this topic, and we will write quite a few.
Be patient - after all, we are talking about your life savings and they did not come easily or quickly.
And at the end of the series, we will issue a checklist you can use to select investments you can trust.