Investment Basics - CBC Radioactive series Part I

Yesterday on CBC radioactive, we covered investment basics. I'm all too often saddened to hear that an individual was scammed by some "too good to be true to pass up" investment only to hear that all their money was then lost. Last week, I received a call from a real estate company offering a new investment (thinking I was still in the financial advising business - pitching me on their product.) They forwarded an email with the offering and I was shocked to see their "guaranteed" return of 12.5% for investors. How is that possible when a 5 year GIC at any Canadian bank is paying 2.2% and the stock and real estate markets are all down? Sure, the 12.5% might be guaranteed, as long as the company stays in business and investors really do get their promised principal investment back. By the way, they were paying investment advisors a whopping 7% commission when mutual funds pay a fraction of that. Hmm, this conflict of interest reeks of a bad deal for investors.

I too learned of a acquaintance last week that, at the advice of her mortgage broker (giving her a mortgage at the time), invested $120,000 of borrowed money a couple of years ago into a "couldn't miss" gold mine stock. Of course it wasn't registered with the securities commissions and was a private deal. She fears that the money is all but absconded by the seller, whom was a friend and colleague of hers at the time. Plus, she trusted this mortgage broker and the "hot tip" she provided. I "googled" the seller's name and within seconds found a plethora of damning information on the net that he had been charged years ago in BC and Alberta with securities fraud. This could have been found by my friend with minimal investigation before invested money that wasn't even hers.

Thus, financial common sense isn't all so common since few Canadians have ever been taught the basics. That's the entire point of this radio series and I hope you'll tune in and send us your questions. We want to educate and more importantly, help protect you in these turbulent times.

If you missed the links and resources from yesterday's segment, check them out at:

• http://www.cbc.ca/radioactive/kelley-keehn.html and
• http://www.kelleykeehn.com/cbc.html

We'll be adding more daily, so be sure to check back soon.