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Share investor Peter Imrie shares his story of being nearly ‘conned’ by a company selling trading software. In many cases the only ones who make money out of these computer-based trading programs are the sellers, not the traders.
It was the late 90s and I was about 19 years old working at a computer store during my holidays and on weekends. One day I got a phone call from someone asking for me by name, I had been selected to become an elite member of a computer-based trading program and invited to join ‘the select few’ who were making massive profits by using this trading software and were securing financial freedom in their early 20s.
For a “relatively small start-up fee” (their words) and a tiny percentage fee for trades, I too could be part of this elite club and be the envy of my friends; they could even guarantee that I would double my money in a certain timeframe and get a return on my investment within just a few months. They promised that everything after that would be pure profit.
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These were the days of the dotcom millionaires and, swept up by the very slick sales patter, I agreed to meet with one of their representatives in the coming days.
Fortuitously I bumped into my uncle the same afternoon and I told him about my upcoming meeting and how excited I was to start trading and investing via this special trading software. Without any judgement he asked me to join him for coffee and asked for more details. After listening to everything, he then suggested I ask the following questions before meeting with the consultant:
- What criteria did they use to select me as a member of their club and where did they get my details from?
- Instead of using fractions and hard-to-decipher percentages, could they show their fee structure using some real examples?
- What recourse was there if their guarantees of doubling my money and their promised return-on-investment figures didn’t materialise? Would I be able to get money back?
After coffee, I phoned the person back and started going through the questions my uncle had proposed I ask. The more I asked, the more evasive they became, until they became irate and told me I was missing out on the opportunity of a lifetime and I shouldn’t waste their time. It was at this point I realised this was some sort of a scam and they were more interested in their commission than having my interests at heart. I was able to call everything off and I never heard from them again.
Thank goodness I was able to get a second opinion from my uncle at the time (who also provided a calm and measured approach in dealing with the situation) and I was able to learn the following:
- Never take things at face value, especially when dealing with your hard-earned money.
- Ask questions so you can fully understand what is on offer.
- If something sounds too good to be true, then it probably is.
After this experience I met with my uncle’s broker who was able to advise me on the best methods of investing and trading for my situation (taking into account my variable income) and this ultimately led to me being able to fund my first overseas holiday and experience playing in snow within 18 months, and still maintain a decent share portfolio.