'Guaranteed 12% return' on investment

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  • zagfles
    zagfles Posts: 20,323 Forumite
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    If any investment could guarantee a 12% return, they'd easily be able to obtain finance from any bank at a rate much lower than 12%. Look at personal loan rates. Anyone with a good credit history can get loans at well under half that rate. A business that can guarantee 12% returns will be a better bet and so would get finance cheaper. So why are they paying 12% for the use of someone else's money when they could get it for 3% or less?
    Frankly anyone who thinks they can get 12% without significant risk is stupid. It might not be a scam, but it will have risk.
  • Aretnap
    Aretnap Posts: 5,215 Forumite
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    Ask your mate why, if he thinks hotels are such a great investment, doesn't he just buy shares in a hotel company?

    I mean, these guys claim that they can guarantee a Return Of 12%, and presumably make a profit on top, so they must be expecting actual returns well in excess of 12% - maybe nearer 20%. So surely it would be better to buy shares in a hotel company and get the whole 20% yourself?

    The answer of course is that hotel companies don't make profits of anything like 20%pa. And being a regulated investment the shares are required to come with a prominent warning about the risk of losing money which will make your poor naive friend run a mile. A hotel room scheme, on the other hand, is completely unregulated so the people hawking them are allowed to downplay the risks and present wildly optimistic assessments of the likely returns. So long as they don't get caught telling an outright lie (and often even if they do) there will be no comeback for them.

    And also being unregulated they can claim that their scheme has a guarantee, which in reality is only worth as much as the people offering it (ie naff all). Whereas in the world of regulated investments even people selling government bonds (the safest investment you can own) are not allowed to call their returns guaranteed!

    So to the naive the dodgy unregulated scheme sounds much safer than the regulated shares - but in reality the opposite is true.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Your friends are being ripped off they will lose all their money. Its as simple as that.
    No one reputable could or would "guarantee" 12% or anywhere near it.
    Tell them this then walk away.
  • Beenie
    Beenie Posts: 1,632 Forumite
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    someone asked who the advisors are and how my friends heard about them.

    It's St James Wealth Management and they were told about this company by some other friends (unknown to us. We move in different circles. Impoverished circles).
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    I actually find it hard to believe that even St James would offer such a blatantly scam investment.
    Everything I've heard of them they offer "proper" investments just very high priced ones with high management fees on top. I'll say it again 12% guaranteed simply must be a scam. The only upside would be that as a regulated firm your friends could probably get compo when it goes Pete Tong
  • TBC15
    TBC15 Posts: 1,452 Forumite
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    Guaranteed 12% complete and utter effluent. I’m surprised there are still sufficient halfwits out there to keep these thieves in business.
  • David_Evans
    David_Evans Posts: 248 Forumite
    edited 10 February 2019 at 6:19PM
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    Beenie wrote: »
    someone asked who the advisors are and how my friends heard about them.

    It's St James Wealth Management and they were told about this company by some other friends (unknown to us. We move in different circles. Impoverished circles).

    Probably connected to St James Wealth Management in some way...

    Would be interesting to see how this all turns out.
  • Aegis
    Aegis Posts: 5,688 Forumite
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    Beenie wrote: »
    someone asked who the advisors are and how my friends heard about them.

    It's St James Wealth Management and they were told about this company by some other friends (unknown to us. We move in different circles. Impoverished circles).
    I'd be surprised if St James's Place offered this, so it's quite possibly a scam firm piggy-backing on the back of a well-known name.


    Either way, for all the reasons given above, steer clear. Something about it will be extremely risky, and if it goes bust the "adviser" will undoubtedly declare bankruptcy before any compensation can be sought from him.
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • dunstonh
    dunstonh Posts: 116,385 Forumite
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    They have told me that they are meeting an advisor next week who is pushing a guaranteed 12% return on capital.
    a) it won't be an adviser. It will be someone pretending to be one.
    b) it won't be guaranteed in reality. It will all be lies
    It's St James Wealth Management and they were told about this company by some other friends (unknown to us. We move in different circles. Impoverished circles).

    SJP do not advise on unregulated investments and their sales reps do not have the remit to do so. This suggests is potentially a scammer pretending to be an adviser (and spoofing is a common fraud tactic).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Aretnap
    Aretnap Posts: 5,215 Forumite
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    Beenie wrote: »
    It's St James Wealth Management and they were told about this company by some other friends (unknown to us. We move in different circles. Impoverished circles).
    I'm immediately suspicious. Do you mean St James's PLACE Wealth Management, a reputable(ish) wealth management firm? Or do you mean some other company with a similar name, perhaps designed for give an air of respectability by sounding like a genuine firm - and to be difficult to Google?

    As above , the general view on here is that SJP are an old fashioned company charging a lot for the type of service they iffer... but I'd be very surprised if they'd started shilling for such obviously dubious investment schemes as hotel room with 'guaranteed 'returns.
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