investment risk

Internet advertising is an equal source of frustration and amusement for me.

Your internet advertising is usually served up to you based on what the major advertising platforms think you’ll like, looking at some assumptions about your demographics (age, gender and location) and also by taking account of your browsing history.

It hopefully won’t surprise you to know that I do a fair bit of reading about money, investment and finance topics! This means that I’m regularly served up investment ads, particularly those targeted at men.

Three of my recent favourites are:

  • Award-winning whisky as an investment
  • Investing in Indian property development
  • Triple your super fund

Here’s what I think of these opportunities…

Whisky as an investment

Sounds like fun, right?

For a lot of people a nice whisky is fun.

But please don’t confuse fun with a good investment.

The ‘special offer’ that this distillery is offering and described as an investment in whisky, is actually a lot more like a commercial loan to a very small company, on the basis of no financial information being provided.

The interest rate is 9.55% pa, which might seem like a good deal, but any sensible bank would be asking to see a business’ financial reports before lending it money. For all you know, the distillery might not even be making enough profit to fund this (it’s a 4 year deal, so they’d need a profit margin of 44.03% just to cover those finance costs!)

Your security is the whisky, but there are some pretty significant catches. If you choose to take possession of the whisky, rather than sell it back to the distillery, well you’re not allowed to actually use the name of the distillery – so you might as well be selling it as home brew.

Also seeing as you’re taking the whisky out of their distillery and outside their bottling process – they’re going to make you comply with food safety laws at your own expense.

…and for the final kicker, if you have made this investment through your self-managed super fund (SMSF), don’t dare think of consuming the whisky yourself or selling it to a close relative, or you’ll be facing penalties for breaching sole purpose and related party tests!

So get yourself to Dan Murphy’s, or your favourite specialist whisky dealer, and enjoy some nice whisky if that’s your thing. But this is called “having a drink” and is quite different to investing your hard earned cash!

Indian property development

Undeniably, my expertise in the Indian property market is pretty limited!

But a few of the promises on their website raise the red flags for me.

Purchasing 20-30% below market prices

So we just need to keep a straight face while we’re told that the local landowner and developer has a benefit to provide to a selected few purchasers. He or she hasn’t chosen close family members, nor friends. Didn’t choose influential locals who might assist future business ventures either. Not even their fellow citizens.

No, the developer would just like to help out a few non-resident investors to earn a few extra dollars.


We’re told that you can easily resell in 12-24 months. It doesn’t matter where you are in the world, property assets aren’t liquid (easy to sell). They are big purchases that cost a significant part of an investor or occupier’s wealth. They involve dealing with government registries as well as ensuring that the person telling you they own the property actually does own it, and any previous debts have been discharged.

Return comparisons

We’re told their investors have earned 25.16% pa, and that this makes it a much superior investment when compared to the UK & US share markets – investments in developed markets which are diversified across many companies. There’s also no mention of the time period for the comparison.


There are a pile of risks that get no mention here, and you can’t get any sort of investment prospectus on the website, all you can do is provide a phone number so one of their sales people can contact you.

My verdict, book a holiday to India. It’s a fascinating place! But please keep your investment at least a little more local, or diversified. Property development has risks all by itself, without trying to be an investor in development in a whole other country.

Triple your super fund

We’re back on Australian shores for this one.

It’s not necessarily about a poor investment, just dubious claims.

You see this self-managed super fund (SMSF) administrator claims that you can triple your $100,000 super fund by using the fund to borrow and purchase a $300,000 residential property.

My problem is not with their choice of investment, it’s with their maths.

Here’s what the original fund looks like:

Diversified portfolio: $100,000

Liabilities: NIL

NET EQUITY: $100,000

…and the fund which has borrowed for a residential property investment?

Residential property: $300,000

Liabilities (loan): -$200,000

NET EQUITY: $100,000

Nothing has tripled overnight – the value of the fund is exactly the same. It can only be tripled if you pretend the loan doesn’t exist. It’s a bit like the day after your purchase your first home saying you’re worth hundreds of thousands of dollars, if only it weren’t for that pesky home loan the bank wants you to repay.

The math gets even worse too – you see you’d easily incur $1,000 in legal costs for the purchase, and if it was an ACT purchase you’ve got another $6,600 in stamp duty to pay. So now your net equity is down by 7.6% – to $92,400. You might get that back in investment returns, but you’re definitely a long way from having tripled your fund!

You need to take some risk

My picking on all of the risks in these investments ideas is not to suggest that you can ever invest without risk, there is always some risk that you need to take to earn an investment return.

The key however is to understand the risks that you are taking, so you’re not caught by surprise.

You can usually obtain information on investments all by yourself by reviewing things such as product disclosure statements or a prospectus. If that’s not your idea of fun, or something you’d put the time into yourself, give us a call on (02) 6247 1233 or email for an appointment and we can help keep you out of trouble when investing your money.