Everybody likes the idea of getting ahead. And being financially successful.
In my experience financial success is generally the result of lots of little successes over multiple years and making investments in assets which you understand.
In the 1980s, early 1990s and even into the 2000s, there were a number of promoters of agricultural investments which were promoted as a shortcut to getting ahead financially.
They were also promoted as being good tax effective investments. Forestry plantations, olive oil and emu farming come to mind. These promoters received a commission for any person they introduced to then invest. Shamefully a number of accountants were lured by this approach. And most of these investments failed to be successful.
In the short term costs are high and income is low. This loss was tax effective because it was able to be applied against other income. The payoff was supposed to be either when the crops were mature and/or the animals were grown.
For many of the crops and forests the planting occurred during a drought. Or an economic recession.
For many that went with emus they did not appreciate that they needed not only to look after the animals. They also had to open and develop a market for emu products (emu nuggets anyone?). Emus were considered so potentially lucrative they were popular as a new agribusiness in the Southern US states and India.
So the lesson here is, if a get rich scheme sounds ‘too good to be true’ then first ask:
- How much money the promoters themselves have in the investment (how much skin in the game they have)?
- Find out why are they letting you in on the secret (rather than keeping the secret to themselves)
- Invest only what you can afford to lose.
Please contact us if you are conducting due diligence on an investment and you need help with the numbers.