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  • FIRST POST
    • steviewander
    • By steviewander 13th Jun 18, 12:58 AM
    • 76Posts
    • 19Thanks
    steviewander
    9.01% fixed rate 5 year high yield bond - too good to be true?
    • #1
    • 13th Jun 18, 12:58 AM
    9.01% fixed rate 5 year high yield bond - too good to be true? 13th Jun 18 at 12:58 AM
    Has anybody come across or invested in this product. It looks too good to be true. They claim a 45.04% return On a 5 year compounding high yield bond:

    https://www.bassetgold.co.uk/bond/5-year-compounding-high-yield-bond
Page 2
    • bowlhead99
    • By bowlhead99 13th Jun 18, 3:07 PM
    • 8,164 Posts
    • 14,918 Thanks
    bowlhead99
    they state:


    Sounds suspiciously like handing money over to Funding Circle who only aim for (and don't guarantee) 7.2% on a Balanced Lending model. Where is the rest coming from?
    Originally posted by Reaper
    Providing institutional debt or equity finance to the operators of P2P platforms or into direct lending opportunities funds is not the same as being a retail customer of a P2P site and signing up to the 'balanced' basket of loans for which a guide rate of 7.2% is suggested.

    Much as my ord or pref shares or bonds with Lloyds don't pay the same as the 0.35% on one of my savings accounts with them.
    • Reaper
    • By Reaper 13th Jun 18, 3:37 PM
    • 6,286 Posts
    • 4,544 Thanks
    Reaper
    OK maybe not the retail product but even looking through the business pages on Funding circle it would be hard to make that sort of return converted to a guaranteed minimum and still make a profit on top. At least not without taking significant risks.

    But perhaps I shouldn't speculate as I have no idea what they are using, it may not be Funding Circle at all.
    • talexuser
    • By talexuser 13th Jun 18, 5:53 PM
    • 2,433 Posts
    • 1,931 Thanks
    talexuser
    I assume with some banks paying a tenth of the base rate and these so called 'Flex' accounts allegedly paying ten times the base rate, that this rumour is too good to be true.
    Originally posted by bowlhead99
    The difference is I've never seen anyone asking if a Nationwide or Santander 5% regular saver is too good to be true. But we do have a regular stream of these types of bonds with the question, often with an implied assumption they are savings products and therefore safe.
    • Ray Singh-Blue
    • By Ray Singh-Blue 13th Jun 18, 7:37 PM
    • 399 Posts
    • 523 Thanks
    Ray Singh-Blue
    This quote on their website:
    "We ensure that your investments are aligned with our interests"
    Originally posted by jimjames
    That's OK then. They'd be marginally more likely to secure my investment if they claimed to be Nigerian princes with a temporary liquidity problem.
    • jimjames
    • By jimjames 13th Jun 18, 9:51 PM
    • 12,705 Posts
    • 11,396 Thanks
    jimjames
    That's OK then. They'd be marginally more likely to secure my investment if they claimed to be Nigerian princes with a temporary liquidity problem.
    Originally posted by Ray Singh-Blue
    On the plus side at least investors who lose money can't say they weren't being honest!
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Malthusian
    • By Malthusian 1st Aug 18, 11:07 AM
    • 4,469 Posts
    • 7,098 Thanks
    Malthusian
    [The post below was in response to a post from an unauthorised Basset and Gold account which has now been deleted.]


    You've only been offering bonds since 2016. If you simply stuck investors' money in the bank earning zero net interest and paid out 9.01% per annum for five-year periods, it would take 20 years before the scheme collapsed if inflows remained constant.

    Why do you think that managing to maintain payments for 2 years means anything?

    If you were to ask our compounding bond investors, they would certainly tell you that it is certainly not too good to be true.
    Indeed not. 9.8% is the least you would expect from an unregulated ultra high risk investment that can lose 100% of your money.
    Last edited by Malthusian; 01-08-2018 at 2:08 PM. Reason: Quoting deleted post
    • poppy10
    • By poppy10 1st Aug 18, 2:00 PM
    • 5,984 Posts
    • 7,234 Thanks
    poppy10
    Never seen such a clear cut case for running away as fast you can
    • badger09
    • By badger09 1st Aug 18, 2:08 PM
    • 6,158 Posts
    • 5,524 Thanks
    badger09
    Never seen such a clear cut case for running away as fast you can
    Originally posted by poppy10
    I suspect, that MSE forum team have removed the post in question, as they also edited Malthusian's response
    • jimjames
    • By jimjames 1st Aug 18, 9:42 PM
    • 12,705 Posts
    • 11,396 Thanks
    jimjames
    Basset Gold Bond reviews
    I suspect, that MSE forum team have removed the post in question, as they also edited Malthusian's response
    Originally posted by badger09
    Maybe Basset and Gold posted after drinking champagne at their day at the races. They must be making a decent sum from the bonds



    https://damn-lies-and-statistics.blogspot.com/2018/04/basset-gold-bond-review-too-good-true.html
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Malthusian
    • By Malthusian 2nd Aug 18, 9:37 AM
    • 4,469 Posts
    • 7,098 Thanks
    Malthusian
    Sounds super. For a company earning a piddling 113,000 net profit (a small but not insignificant number of the forum regulars will have higher income as individuals than this company claiming thousands of investors) they're extremely generous to their staff.
    • dale_cotterill
    • By dale_cotterill 6th Aug 18, 9:24 PM
    • 97 Posts
    • 67 Thanks
    dale_cotterill
    A sleeve sponsor on West Ham's 2018/19 shirt as well.

    Not quite as 'too good to be true' as some of the stuff we usually get on here. They seem to be at least attempting a legitimate business model than going for all out fraud.

    I don't get the business model though. They seem to make their money lending to lending platforms.

    You are basically giving money to a company who lends money to the companies who lends money to those who generally are unable to get lending through the traditional source.

    In the event of weakness, I find it hard to believe that these 'assets-backed securities' are worth the paper they are written on.
    • Malthusian
    • By Malthusian 7th Aug 18, 9:34 AM
    • 4,469 Posts
    • 7,098 Thanks
    Malthusian
    A sleeve sponsor on West Ham's 2018/19 shirt as well.
    Originally posted by dale_cotterill
    Not sure either of them benefit from that association

    Not quite as 'too good to be true' as some of the stuff we usually get on here. They seem to be at least attempting a legitimate business model than going for all out fraud.
    So do pretty much all of the "too good to be true" unregulated investments we see here.

    Investing in wind farms, SME loans, property development, storage pods, payday loans to the Sioux Indians, or lately cryptocurrency mining - pretty much every unregulated bond offering returns of 8-12% per annum has some sort of legitimate business model behind it. And you can almost guarantee that these activities are being carried out. To some extent.

    The main risk is not that the whole thing is a scam and all the money disappears (possible but rare). The risk is that the legitimate business is unable to generate sufficient returns to cover the scheme's costs and investor interest. Especially after it is done paying commission, other marketing costs and other overheads.

    You are basically giving money to a company who lends money to the companies who lends money to those who generally are unable to get lending through the traditional source.
    To be very pedantic, you are giving money to a company who lends all of it to River Bloom Limited, a company domiciled in Cyprus. What River Bloom does with the money is effectively a black box as even Basset & Gold's own auditors haven't seen River Bloom's accounts (page 9 of the PDF).
    • Reaper
    • By Reaper 8th Aug 18, 8:58 AM
    • 6,286 Posts
    • 4,544 Thanks
    Reaper
    To be very pedantic, you are giving money to a company who lends all of it to River Bloom Limited, a company domiciled in Cyprus. What River Bloom does with the money is effectively a black box as even Basset & Gold's own auditors haven't seen River Bloom's accounts (page 9 of the PDF).
    Originally posted by Malthusian
    Nice link, but to be even more pedantic it's page 7
    • Malthusian
    • By Malthusian 8th Aug 18, 9:28 AM
    • 4,469 Posts
    • 7,098 Thanks
    Malthusian
    Nice link, but to be even more pedantic it's page 7
    Originally posted by Reaper
    Page 7 of the accounts, page 9 of the PDF.
    • AnotherJoe
    • By AnotherJoe 8th Aug 18, 9:33 AM
    • 10,129 Posts
    • 11,387 Thanks
    AnotherJoe
    So this shows how worthless auditors reports are. Or this one anyway. Im amazed such a pathetic statement counts as a report.,
    It might as well have said "we think this is OK because the directors who are paying us to do this report told us it was OK" and not bothered looking into any detail
    • Reaper
    • By Reaper 8th Aug 18, 3:01 PM
    • 6,286 Posts
    • 4,544 Thanks
    Reaper
    So this shows how worthless auditors reports are. Or this one anyway. Im amazed such a pathetic statement counts as a report.,
    It might as well have said "we think this is OK because the directors who are paying us to do this report told us it was OK" and not bothered looking into any detail
    Originally posted by AnotherJoe
    Not quite. It is listed as an "Emphasis of matter". That's equivalent to the auditors drawing a big arrow pointing to it in the report. You should beware any such entries in the report and consider hard whether you still wish to invest.

    There is another higher priority called a "Qualification". That means while most of the accounts are OK this particular item they are unable to sign off on, which might be anything from not following accounting standards properly through to fraud.

    Then there is the very rare final resort of refusing to sign off the accounts at all.
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