Blue Chip and other dodgy investments

Have I missed some important snippet in the story of the collapsed investment company? I spent a small part of my life this evening watching what nowadays passes for investigative journalism on television, TV1's 7.30pm current affairs show, which told me very little other than that some people mortgaged their home to obtain money to invest in something they thought would make them more money and then lost it all.

Do people seriously believe it's a good idea to borrow to invest? Is it ever so, unless you have some cast-iron guarantee that the returns will be greater than the costs of such borrowing?

It looks like greed and short-cutting to me. Are we supposed to feel sorry for the people who lost their money on a bad risk they thought would make them a whole pile without any personal effort? I heard a bloke on the radio the other day suggesting that the government should step in to help these poor investors. That's a bit like handing out food parcels to the people who are finding it hard to maintain their holiday homes now that interest rates have risen and they can no longer afford to dine out three times a week.

I used to have a lot of faith in the concept of common sense. It seems such sense is now rather less common.

Ah Isla, as I watch my Folk getting older and more upset with the World, where they worked hard, paid their taxes, declared every cent and basically did the right thing to end up finding it hard to make ends meet, I can understand people like them using the last of their super' to try and make another late term go at a better life. I really can.

Having been (years ago) to an investment seminar in Sydney that was flogging extremely expensive property in Qld, and thinking those guys were absolute jerks, I could see the people falling for the "free" flights up north, guaranteed rental income, assured valuations etc etc, these p...... should be shot so they cannot reinvent themselves to squander other peoples money over and over.

It upsets me greatly that currently living on the north shore in Auckland is one b..... who (along with his "partner") should be lined up with the rest of them, lives the very high life but has no money of his/her own, because s/he used others money to feather his/her own nest. And the people cannot touch him/her because he declared bankrupcy earlier on, and she uses blackmail to keep people out of court.

Yep, if the laws dealt to this guy (and her) properly in the first instance, s/he would never have had the opportunity to give it another whirl time and time again.

But isn't it the older, wiser generation who also taught us, don't invest what you can't afford to lose? Obviously that wasn't universal.

Agree Isla, I can't believe people mortgaged their homes for this - and now there is suggestions the valuers involved were hyperinflating the values of the properties and complaints have been made about them...

Mary Holm in her finance column in the Herald last weekend was pretty blunt about it all:

www.nzherald.co.nz/section/12/story.cfm?...12&objectid=10500677

The rule of thumb is that the older you are, the less risk you take as you have less time to make up for any financial disasters. The pity in this is that these guys were better salesmen than financial whizzes...although I am sure they are all doing quite well for themselves...

These guys play on peoples' fear of retirement.

Unfortunately I think the sales pitch was pretty slick. I am tossing up as to whether I am sympathetic or not some people definitely were pretty silly to hand over huge amounts of money on a promise, but I think they fell for a sales pitch carefully orchestrated to head them into signing up. Usually they weren't very investment savvy and were working on some of those myths like "you can't lose with property"

I am feeling there was some deliberate misrepresentation involved and whether or not the Valuers were guilty of fraud will no doubt emerge in due course (I would think that a lot of Auckland apartments have shown similar drops in value over the last couple of years though).

Looks like another big finance company is in strife too...

www.stuff.co.nz/4457547a13.html

...and that is 49% owned by ANZ, which indicates to me that even money invested in 'rock solid' bank schemes is not that safe...

"There's no fool like an old fool"
Once again the poor taxpayer is being looked at to try and bail out these "greedies"
Anybody who gets a mortgage to try and make money at their age deserves all thats coming to them.

I got rung up by these Blue Chip people a couple of times. Unfortunately (make that fortunately), they failed the "If it sounds too good to be true, it probably is" test. They were offering guaranteed income returns, for absolutely no initial outlay, and I simply didn't believe them. Told them so too, on one occasion.

Isla's right. A little common sense would have saved these people a lot of heartache (and money)

I got called up after the problems started - I asked incredulously 'are you kidding?' but I don't think the cold caller on the other end of the line had any idea whatsoever what I was talking about.

I also saw most of that programme last night (missed the last 5 minutes or so).

I can't believe these people were so gullable that they signed these legal documents without taking legal advice first. Surely, everyone knows you get your lawyer to check these things out BEFORE you sign them?
Obviously not. As the lawyer said, the problems would have been glaringly obvious to someone in the legal profession who would have strongly advised to NOT sign, and flag the whole thing.

So in that respect, they got what they deserved.
But I really think they were suckered into something by hard-push sales people (who were also misled, so it would seem), on the promise of high returns for little output - just doesn't happen.

The guy behind it all is still sitting pretty in his fancy house with all its trappings and the luxury cars.

ronnie;155748 wrote: The guy behind it all is still sitting pretty in his fancy house with all its trappings and the luxury cars.

As is always the case, it seems [!]. No doubt they are also in trust or in his wife's name so they can't be touched...

It amazes me too that people will sign away hundreds of thousands of dollars just like that but won't spend a few hundred on an accountant or a lawyer to give them advice on it/check it out for them.

would have to agree with the general sentiments above - never invest more than you can afford to lose and never borrow to invest!!!!!! Sadly though this doesn't always work - my brother in law is a "financial planner" and he invested money belonging to my MIL in ING without her really understanding what he was doing, nor knowing until afterwards. She had not long been widowed, this was her son advising her, she at that stage was almost completely deaf (OH and I have now got her proper hearing aids), I was not in their lives (I have just ended 14 years at a Univ lecturing economics and financial maths so know a bit about this sort of stuff), she has only been my MIL for 2.5 years and OH didn't know of the investments being made. Fortunately she only has about $13,000 invested with them but she is almost 82 and can't understand why she can't just have her money back. There is a huge (misplaced) trust issue (long long story, BIL was ripping her off big-time) as well. As the investements were not made on the advice of the ANZ but rather the son (we don't have anything to do with him any longer after he retained the funds from MIL's house sale a couple of years ago) and he appears to be self-employed. At the time he had EPA as the elder son. MIL has subsequently changed this so that my OH now has EPA, but what does one do here? Who can we complain to (if anyone)?

Isla;155604 wrote: But isn't it the older, wiser generation who also taught us, don't invest what you can't afford to lose? Obviously that wasn't universal.

Oh I agree Isla, and my Parents are not involved in this situation either, but when people are having to be mindful about their heating expenses, unable to afford to service their car (if they have one) and the increasing expense of Doctor and specialist fees, I can understand why the older folk well why not "try" esp when the Directors of such businesses make everything sound so bullet proof.

The "hard sell" issue keeps coming up as almost an excuse for these people being led astray and getting shafted:

• Nobody would believe a sales person of self-flight adventure who offered feathers and glue to fly off the sky tower.
• Some idiots might
• Government legislates for minimum standards for flight adventure operators

But if some idiot still jumps with an unregistered operator and the operator runs away and changes his name (or all the scammed money is in someone else's name) then you still can't stop it happening.

Maybe risk takers just have to learn that sometimes they'll get badly burnt. Maybe all this mess will educate more people about risk and weighing it up against promised benefits.

Isla, that is exactly the argument as to why the govt shouldn't step in - cos if they do, people will continue/start to take the bigger risks knowing there is backup, rather than have to decide for themselves if the risk is worth it or not...