This year’s Halloween celebrations may be over, but there is no need to be less vigilant in keeping a close eye on your money plans and the scary things that can happen to your financial objectives. As the saying goes, if it looks too good to be true, it usually is. This might apply to many aspects of an individual’s life, and with Black Friday retail offers around the corner, make sure that any purchases are really are a deal.
We also need to consider other pressures on money planning at the moment, such as rising inflation and energy costs, along with the risk that base rates (interest rates) might rise to keep inflation in check. There are also usually risks when investing money and we have made a few notes below.
I always thought that a Fiat was a spirited continental car, that could be somewhat temperamental, usually as it aged. However, I saw a headline referring to ‘fiat money’ or currency, in the context of cryptocurrency and the government authorisation of a legal tender. To be clear, cryptocurrency is not a legal tender, and this sparked my interest. You can surmise that legal tender is subject to far greater control (and indeed regulation) than a cryptocurrency.
The number of unregulated investments (cryptocurrency or otherwise) seems to be on the rise and is, where appropriate and possible, a focus for regulators whose aim is to protect consumers. Understanding what you are investing in is not always that easy, and some investment markets and conditions (for example, when there is significant volatility) may not work in the way that an investor had anticipated. The old adage of ‘if it looks too good to be true, it usually is’ is invariably reasonable in this context.
The channels and formats of information distribution have also changed significantly with social media and the like, allowing vast amounts of communication with the public at a few touches of a laptop. The demographic that receives this information is usually at the younger end of the investment age range and may be swayed by influencer endorsements, as we have seen in the press in recent months (after the UK regulator has caught up with some). Ironically, the Financial Conduct Authority (the FCA) is now using influencers themselves to warn people about high-risk investments through an awareness campaign, as detailed by the BBC in mid-September 2021. More here:
There are a few things that you might want to look out for, including the following:
Did you make the approach to invest, or were you invited (a direct approach is sometimes a sign of a scammer)
If you don’t recognise the name of the business making the offer, check them against the FCA register here: https://register.fca.org.uk/s/ If authorised, this may provide you with some protections through sources such as the Financial Services Compensation Scheme.
Do you know whether the investment is regulated by the Financial Conduct Authority or unregulated? Do you understand what you are investing in and how much you could lose if it goes wrong?
If the recommendation comes from an adviser, are they listed on the FCA register?
If in doubt, take advice from an authorised adviser who can help, or at least guide you as to the risks and potential scams that are sadly plentiful at the moment.
As suggested before, be careful, and remember please, if it looks too good…