Scams and success stories. How I hate it when people lose money!!!

Early in April this year I received an e-mail message from someone that has been living in Dubai for quite some time requesting advice on offshore investments. This happened after I have published numerous articles on the state of the economy in South Africa. Tax issues facing South African expats living abroad, estate planning, the importance of proper financial planning when making investments.

The message read:

"Dear Wouter

I read an article you posted recently and wanted to ask what you would advise. My parents have around $60 000 that they would like to put in an offshore investment, what would you recommend. They are both 68 yrs old.

Look forward to hear from you.

Kind Regards

xxx"

I immediately replied to the writer stating that I never give investment advice to prospective clients before obtaining all relevant information about the investor, his personal financial circumstances, present investment plans in place and his retirement planning and other financial objectives.

I am a professional financial advisor and when giving advice to prospective clients, I would treat them the same way as I would like to have been treated by an advisor giving me advice on my own investments and assets considering all aspects lifestyle, financial structures in place and what is needed to realize my dreams and future financial objectives and plans.

I would expect my financial planner to be knowledgeable about investments, financial structures like trusts and estate planning and have a wide knowledge about the interpretation of economic indicators, finance and the investment climate at present and what can be expected in the future. I would want him to be able to give me sound financial advice and to be able to assist me in making the right investment choices as well as helping me to put financial structures in place that would be able to stand the test of time.  To be conservative and careful with my money but still be able to give investment advice that will give returns higher than inflation with proper growth and security to safeguard my hard earned capital and accumulated wealth.

When investigating the financial circumstances if my potential offshore investment clients, It actually turned out that the parents did not really had the funds available to invest  any more as it had been  invested with an unlisted and unknown investment company operating from some very plush offices in Dubai and they were waiting for the investment company to make good on their promise to repay some of the proceeds of the investment to their parents. This company offered returns of over 30% to potential investors on the capital invested with them. The company also had an elaborate website spelling out how they manage to show such huge returns on funds invested with them and even investment advisors assisting clients to invest their hard earned funds with them.

It also turned out that the children themselves had invested into the scheme with funds borrowed on their credit card!!! For a short while they have received huge returns on their investment every time they called up some of the profits and were very happy investors. It was raining money!!! They thought it would not be long before their capital would have doubled or even quadrupled, invested even more money into the scheme  and recommended this amazing investment opportunity to many friends and to their parents! I believe that they actually meant very well and never thought that the investment would turn out to be a scam after the returns dried up and no further payments were made to them or any of the other investors.

Since then I have met with the parents during a visit to South Africa and learned that the father have invested most of his life savings into this scheme Because their children in Dubai have been receiving these 30% plus returns for some months they thought it safe to also invest in the scheme.

This is very typical in Ponzi type investment schemes where high returns are initially paid to the investors from the money invested by new investors to attract more funds and then when the investment pot is big enough the promoters  and the funds quietly disappears from the scene. The investors are then left with only promises of future payments and a lot of excuses to give the promoters more time to get away.

In April when I first heard about this, I did some investigations myself and found out that an article appeared in January this year in a local UAE newspaper. The article in the National published in Abu Dhabi have  exposing the scheme as being fraudulent and warned people not to invest in such schemes.

It is very sad to listen to a 68-year-old man telling you that he has invested most of his life savings into a failed investment plan and is still hoping that he will get some of his invested funds back in the future.

After more than 35 years in the financial services field I know that there are no get-rich-quick schemes and have seen numerous hopeful investors with sad faces and empty pockets after they have lost their money in similar scams.

Luckily I know of many more success stories than these disastrous experiences that we hear about from time to time. I have seen many of my clients with big smiles then their investments yield better that expected returns at maturity.

Let me tell you about 41 year old South African Chemical Engineer David who has been working in Saudi Arabia for just more than a year.

David and his wife have four children the youngest being 4 years old and the oldest have just turned 12. They are planning to build an education fund that will enable them to let all their children study for a 4-year University Degree at a South African University. With the present unrest and things happening at South African Universities, they may have to reconsider this decision and it may be that they would want to send the children to a University outside South Africa when the time comes, but I think they would be able to do so with ease as they are serious about their future financial planning for themselves and the family.

What I liked most about David is that he follows a meticulously planned monthly budget and that he has sound financial discipline even when earning an above average income in Saudi Arabia. 

He provided me all the information I required about his South African retirement annuities, investment plans and a property investment and with this in hand it was easy to present to the family an investment plan that would enable them to educate all their children as they had planned. I calculated that they would need R 5 768 000 (US$ 354 000 at the time) to enable educate their children at SA Universities taking inflation for future educational and living expenses into consideration.

It took me about two weeks to prepare a proper financial analysis for him and even supplied David with a spreadsheet to show him exactly how much funds needed to be withdrawn each year starting in January 2024 until January 2034 when the tuition fees need to be paid for the final year of study of their youngest child. David would then be 65 years old and ready to retire, but the plan I presented to him is very flexible and can also double as a retirement plan should David decide to increase his contributions in the future.

David actually wanted to invest $ 2000 per month but I advised him to start with only $1 000 per month and save the other $1 000 in his bank account until his family have settled down with him in Saudi as they were still living in SA. Visas for family members for Saudi Arabia is very expensive and the process can take quite a long time as many South African expats have experienced in the past.  He has since then thanked me for this advice as it took a lot longer for the required visas to be obtained and enabled him to prepare and equip their family home in Saudi Arabia in a proper manner.

I recommended an investment plan underwritten by Hansard International to David and he has excellent 24/7 online access to all the investment information, fund performance with graphs and full investment data and David can also change any of the fund choices he has made at any time should he deem that the returns that has been achieved by the specific fund has not been good enough.

I am happy to tell you that since inception of the plan in January this year the investment fund had a positive return even during this very volatile market conditions. At present most of the investment is in equity but it is a very well balanced and diversified fund and the fund value at present is almost US$ 5 000 mote that the capital invested!

This is very good and even if the markets should go down over the next few months, David would still score a lot because of the principle of dollar cost average as he is investing in monthly installments into the plan. When the market goes down, the investor buys more units at lower prices and when it goes up, the older units share in the market gains of the higher unit price.

The information available from Hansard International include inter alia charts depicting the asset type, Industry sector and geographic region where  the investments that were chosen have been invested as well as a real time graph of the performance of each investment fund chosen.

The fund can be used to supplement his retirement income at his retirement date and contributions can be increased at any time when more income is available .I know of very few funds available in South Africa that can offer these benefits and as time goes on, I expect that David will invest more of his available surplus cash into this fund at regular intervals to increase his investment pot.

I may not be around anymore when David’s investment will mature as I am already over sixty years of age, but I am satisfied that he is in safe hands and his hard earned money is invested properly in a safe and secure offshore fund.

One of the benefits I have offered to David is that the funds of this investment are under advisement of Fidelity International, one of the most respected fund advisors globally and with the access I have to advice and financial reports provided to me on a regular basis by senior management of the Fidelity Group in the Mid-East and Africa, I can advise my clients accordingly when investment circumstances may change and adjustments need to be made to the fund selection or investment structures. I can sleep peacefully at night knowing my client’s investments are well taken care of.

At present there is a lot of financial and economic uncertainty in South Africa and most South African investors are concerned about what to do with a failing economy and an unstable and depreciating rand. Almost every financial advisor is advising their SA clients to invest offshore in a well-balanced and diversified investment portfolio. This may be a lifeboat for many when the ship goes down.

I am in the very fortunate position that I can assist clients in South Africa as well as expats living abroad to invest their hard earned money in a safe and recognized offshore investment vehicle by using the legal allowed foreign exchange allowances available to South Africans. I will ensure that all the tax and legal requirements of the South African Authorities are met when making these offshore investments and treat the funds of the investor as I would treat my own investments. Safe and secure. No one wants to fall foul of the law and there is only one way to do things and it is to do it the right way!

This I have learned over the last 35 years and I hope to make sure many more South Africans would be able to ride out the present financial storms in South Africa knowing that their assets are in a safe protected place.

I can provide you with more information and examples of what we can do for you and how we can structure your offshore investments can be obtained from me at any time. Send me an e-mail and I will definitely get back to you and see what we can arrange do be done for you.

As one of the tot financial experts in South Africa have stated: “The smart money have already left the country, when will the rest follow?”

If you want to protect your assets from the ravages of a possible tsunami action must be taken soon. I personally think the window of opportunity will not be remaining open for very much longer.

Contact me. I am sure I can help!

Mail: [email protected]