Timely warning on investment from LCB (Vinothèque)

Timely and very useful warning from Jane Renwick, general manager of Vinothèque – the fine wine storage division of London City Bond, highlighting some potential dangers of wine investment:

 

Dear customer

Over the past few weeks it has come to our attention that numerous companies are cold calling our private customers using underhand tactics to buy or sell wines.  May we strongly suggest that you take some time to read information that is supplied by Jim Budd, to ensure that these are legitimate companies at http://investdrinks-blog.blogspot.co.uk/.

You may also wish to peruse the below points:

Investment Fraud

This information has been produced to provide hints to avoid falling victim to investment fraud. Please take a little time to read through.
 

• Out of the blue – Remember that authorised investment firms and brokers do not use cold-calling as a sales technique, so if you receive an unsolicited telephone call from a person or organisation you do not know, offering you an investment opportunity, take extra care.
   
• No thanks – You can avoid many unsolicited telephone calls by registering your phone number with the Telephone Preference Service (TPS). The TPS is the official central opt out register for people who do not want to receive unsolicited sales and marketing calls. This is free to do by calling 0845 070 0707 or online at www.tpsonline.org.uk
   
• Now or never – The salesman (they often call themselves ‘’Brokers’’ or ‘’Portfolio Managers’’) may put you under pressure to make a quick decision to invest – for instance ‘’this is the last available and if you don’t buy today it will be gone tomorrow’’. Don’t be forced into making rash decisions. Take your time to think it through, speak with your family, an independent financial advisor or a similar independent professional. It is probably better to lose an opportunity than to lose your money.
   
• All that glistens – The commodities offered in investment scams are often unusual – plots of land, fine wine, carbon credits, coloured diamonds, rare earth metals, or gold-mining to name but a few. Unlike quoted stocks and shares, it can be difficult to find out the underlying value of such commodities. Should you be temped by such an offer, make sure you really know the true value of what you are considering buying – don’t take the salesman’s word for it.
   
• Risk and return – The general rule with investments is that the higher the return offered, the higher the risk of losing your money. High return investments with minimal associated risk do not exist. Don’t be impressed if the salesman tells you how much money you would have made if you had bought shares in Microsoft or Google when they first came to the market – you won’t be buying these shares after all.
   
• No way out – Ask about the exit strategy – how can you realise your investment and receive your return? Will a national housing developer really want to buy your small plot of land in the middle of a field in Kent? Will a multinational microchip manufacturer really want to buy your 1kg of Gadolinium? As with any capital investment, you can only make a profit if you sell on for more than you bought in – ask yourself where the market is.
   
• A racing cert – If the commodity is such a certainty to show a profit in a relatively short timescale, ask yourself why a company would want to sell it to you. Surely they would hold on to it and keep all the profit themselves? I would.
   
• Too good to be true – If it looks too good to be true it probably is. Professional investors don’t get it right all the time and the risks to the armchair investor are greater still. Hedge funds may be able to afford losses on some of their more exotic investments, but can you?

Should you require assistance please contact a member of our Customer Services team on 0843 659 3617 or vtcustomerservices@lcb.co.uk who will be more than happy to help you in any way they can.

Kind regards

Jane Renwick

General Manager