Investment opportunities

If you plan to retire to the Costa del Sol, have sold up totally in the UK and therefore have capital to invest to provide an income for the rest of your life or if you are younger and plan to be successful and then, by investing the proceeds of your income be very, very careful where you invest this money.

The fly-by-night operator

On the Costa del Sol you could be unfortunate enough to find yourself in contact with what is often referred to as the fly-by-night operator. These financial advisors advertise in the press and on other media such as the Internet or they may even canvass you by telephone. Many of their advertisements are in the form of advertorials in the English language press. It looks like an article about finance but it is actually a paid-for-page of advertising.

The carrot is a very good apparent rate of return for your money compared to other current investment opportunities. You are the bait. You obviously want a good investment to make a healthy profit and they are just waiting to take your money. We have read of people who have lost virtually all of their life savings through entrusting their capital to such companies.

They will often appear to be very reputable businesses with very luxurious offices. They appear to be very respectable. They are very good salesmen and on occasions it can even appear to be difficult to organise an appointment with them because they appear to be so busy helping people to make a fortune. The salesmen will be very good at talking to you and they may even blind you with financial jargon which you do not really understand. They will try to convince you that the investments they propose will outperform anything else currently on the market and they will of course try to minimise any risk which might be involved.

When pressed they will admit that risk is always there but your potential return will be so good it is worth taking the gamble. These very nice people are there to help you get rich!

These companies will often try to persuade you to make quick decisions because, after all, if you hesitate you may never have the same opportunity again. The offer may not be available next week! If you make a quick decision it may mean (and probably does mean) that you have not had the time to contact another financial advisor who might advise you that what they are offering may not actually be such a good investment after all.

They will provide you with testimonials from other satisfied customers who appear to have made money from their investments. Sometimes their clients do make money short term and allow themselves to be used for testimonials but it is your long-term future you have to consider. In fact there are cases recorded where the investments have been set up in such a way as to show an initial dramatic return on the investment. It is only a few months later that this starts to change.

Identifying the fly-by-night operator

The first step you, as a potential investor, must take into account is to identify the company which could be a fly-by-night operator. You can check with the Directorate of Investors – the CNMV – who have an English-language Website on www.cnmv.es. This will at least be able to tell you if the company in question is recognised and authorised by the Spanish authorities and the Bank of Spain. Many people have contacted the CNMV only after they have lost their money and by then it is too late to do anything.

You need to ask questions as to whether the investment on offer is the right one for you. You need time to consider any proposals and perhaps even have them explained to you in front of your lawyer or other financial expert known to you personally.

You should also check how long the company to whom you are considering entrusting your money has actually been in business, the qualifications of the directors and their experience in the financial markets into which your money is going to disappear, what commission they propose to charge you and, most importantly, how do you get your money back should you decide to pull out of the investment.

This is too good to be true!

Deals which appear to be too good to be true are often just that – they are too good to be true. If the stock market is returning an investment of let’s say 5% why should another investment return 10% if it does not involve a considerable gamble. Such investments may indeed return a much higher percentage but they are really only suited to very young investors who can afford to take the risk – even if they lose everything, they can start all over again. They are not suitable for the investment of one’s life savings.

One problem which has faced investors who have lost considerable sums of money through high risk investment programmes in the past is the problem of legal retribution. The company to whom you plan to entrust your life savings may not be recognised or even registered in Spain and if you are a Brit, being ripped off by your fellow Brit, the Spanish legal system may not put your problem at the front of the queue should you decide to take legal action.

At the end of the day it is your money and you should attend all meetings prepared to take careful notes of the meeting and with a determination not to hand over any money until you are absolutely certain where it will be invested. Do not sign anything until you have taken good independent financial advice.