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Whose Hand Is In YOUR Pocket?
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Transcript

  • 1. Enzo Financial Group
  • 2.   The Scam Gallery
    • 1. Pyramid Schemes
      • Presented as legitimate MLM
      • Paid for people joining
      • No product
    • 2. Ponzi Schemes
      • Money from new investors used to pay profits (interest) to earlier entrants
      • No recruiting or downline
    • 3. Pump & Dump
      • Perpetrator/promoter buys low-priced shares of a small, thinly traded company, then spreads (false) information to drum up interest and boost the stock price.
      • Investors buy in and increase the stock price, then the promoter dumps his stock and the stock price falls.
    • 4. Advance Fee Fraud
      • Investors are offered the opportunity to get rid of worthless investments at a high price and are asked for a fee for the service.
      • Often follows Pump & Dump
    • 5. Offshore Scams
      • Wonderful investment opportunity in another country
      • Fraudster takes your money and disappears
    • 6. Churning
      • Assets bought and sold to generate commissions
    • 7. Selling Inappropriate Investments
      • To generate bigger commissions
    • 8. Excessive Fees (Greed)
  • 3. What To Look For
    • If it looks too good to be true, it probably is.
    • The promise of an exceptional return on one's investment.
    • Your own FEAR & GREED can cloud your judgement.
    • Understand the product
    • Ask questions. Legitimate professionals should be able to explain clearly what they are doing. Especially financial planners!
      • Would a financial planner have the expertise to advise you on a real estate transaction? Maybe.
      • Would a realtor have the expertise to advise you on a stock play? Maybe.
      • Would a realtor have the expertise to advise you on a real estate project investment? Maybe.
    • Understand the investment you're seriously considering including:
      • What the investment is
      • What the risks are
      • How the investment makes money
  • 4. What To Look For
    • Investment returns are invariably commensurate with risk.
    • Just like in business. If you want a steady job, buy a Tim Horton's or Dairy Queen.
    • If you want to make a million dollars over the next 3 to 5 years, be a land developer.
    • If you want to aim for the higher rewards, you have to be able to accept the risk.
  • 5. Warning Signals
    • Guarantees
    • Overly consistent (high) returns
    • Missing documentation
    • Account discrepancies (when someone else has control over your money)
    • Pushy salespeople
    • Mismanagement
      • Many people fall prey to mismanagement -- they don't know the product or understand how it works.
      • There might not be outright fraud involved, but the investment could be totally mismanaged, or management may be taking out enormous fees and commissions.
  • 6. Who Do You Believe?
    • Even legitimate investments sometimes turn out to be massive deceptions.
    • The subprime mortgage fiasco
    • Asset Backed Commercial Paper
    • Hedge funds with capped returns
    • BRE-X, YBM, Nortel
    • Milowe Brost -- 1,000's of investors >$100 million
    • You have to rely on your gut ... your sixth sense ... your own due diligence
    •  
    • "While the existence of a regulatory framework provides some security against the resulting losses, there are gaping holes in the safety net and investors are not as informed as they ought to be. ... There is a need for a single, independent (from industry sponsorship) national securities regulator to replace the provincially regulated patchwork that currently exists. FOR NOW, THE ONLY ALTERNATIVE FOR SMALL INVESTORS IS TO BECOME MORE ACTIVELY INVOLVED IN THE INVESTMENT PROCESS, IN HOPES OF AVOIDING FURTHER LOSSES.“
    •  
    • In this day and age, you can't make it on a job alone ... You must invest your money and allow it to grow ... Make it YOUR BUSINESS!
  • 7.   Questions to Ask Before Investing *** Your Due Diligence ***
    • Does this investment match my investment goals?
      • Why is it suitable for me?
    • How will this investment make money?
      • Dividends, Interest, Capital Gains?
      • How has it performed in the past?
    • What must happen for this investment to increase in value?
      • Is it realistic to assume this will happen?
    • What are the specific risks associated with this investment?
      • What is the maximum I could lose?
    • What are the total fees to purchase, maintain, and sell this investment?
      • How do these affect my profit?
    • How liquid is the investment?
      • How easy would it be to sell if I needed my money right away?
    • If Mutual Funds:
      • What type of securities does the fund hold?
      • Does the fund invest in any type of securities that could cause the value to go up or down rapidly over a short period of time?
      • Has the management of the fund changed recently? How might this affect performance?
      • How much are the sales and management fees?
  • 8. Maximise Your Odds of Investment Success
    • Be on the alert for the warning signals
    • Be realistic about your investment expectations
    • Deal only with regulated and accredited individuals and companies
      • Do your due diligence: Understand the product(s) you are buying
      • If you don't understand it, stay away
      • If you don't know much about investing and you don't want to learn or make it YOUR business, stick to government bonds and dividend-paying blue chip stocks
    • Buy enough different assets to maintain a properly diversified portfolio
    • Know who you are dealing with
      • How do they get paid? Fees or commission?
      • Sometimes independent fees-only relationship may be preferable because the "consultant“ is not motivated by high commissions.
    • Don't put all your eggs in one basket ... especially a basket that you do not control!
    • Monitor your investments
  • 9. Investor Profile
    • Investor, Know Thyself -- What is your motivation?
    • An investor profile describes an individual's preferences in investment decisions:
      • Short term trading (active management)
      • Long term holding (buy & hold)
      • Risk averse / risk tolerant / risk seeker
      • All asset classes / single asset class (stocks, real estate)
      • Home turf / international
      • Hands on / investment fund
    • An investor's style is determined by:
      • Objective determinants: personal data, social traits (age, gender, income, wealth, family, tax)
      • Subjective determinants: attitudes linked to temperament (emotions) and beliefs
      • Financial return & Risk objectives: precisely set and fully rational
    • The word "investor" is quite a general term that means different things to different people. Dictionary.com defines investor as:
      • " Someone who commits capital in order to gain financial returns."
  • 10. Where Does Your Money Go?
    • When you write your cheque, where does your money go?
      • To the investor that you purchased the security from.
        • You buy a publicly listed stock -- the money goes to the person who sold you their stock.
        • Because the stock is trading on the open market, the company who originally issued the stock does not benefit from the sale.
      • To the company that issued the security.
        • Company raises money for a "project" and they sell shares or issue bonds in their company to raise the money ... they trade equity for cash.
        • The shares and bonds can trade on the open market unless in a private issue.
        • Equity investor has percentage ownership in the company (property, project), percentage of cash flow, perhaps percentage of appreciation.
      • To the company in the case of the company borrowing money to purchase assets or complete a project.
        • The lender (investor) receives interest while the company (borrower) retains ownership of the asset and pledges to pay the loan back on certain terms at a certain time.
        • Generally the borrower will pay less with a lending investor rather than giving up equity in the project.
  • 11. Where Does Your Money Go?
    • Investors (lenders) choose the type of investor they will be based on their investor profile (needs):
      • Monthly income or future gain or both
      • Time and attention required to monitor the investment
      • Capital requirements to make the investment
    • Companies (borrowers, partners) must find a match between what their project/company needs and what the investor/lender needs AND the two must find each other!
  • 12. Our Commercial
    • Enzo Financial Group works with people who want to add to their bottom line by making profitable real estate investments so that they can enjoy life as entrepreneurs without draining their bank accounts or sacrificing precious family time.
    •  
    • Enzo Financial Group manages the Enzo Mortgage Investment Fund, a Western Canadian an open-end investment trust with a portfolio of mortgages on Canadian commercial and recreational properties. The Fund provides construction financing to real estate developments in Western Canada.
  • 13.  
  • 14. EFG Investor Relations Fund Project Financing Real Estate Projects Interest + Bonus Profits - Admin Fees Distributions Marketing YOU! Associate Marketing Assistant
  • 15. Everything should be this simple 1. Deck Chair 2. Desk Chair 3. Driver’s Seat YOU! EFG Fund goals skills gaps Your Strategic Plan