Staying Safe from Investment Scams

This BBC podcast is supported by ads outside the UK The ultimate cookout starts with the ultimate ingredients. At Whole Foods Market, no antibiotics ever burgers and kebabs are prepped and ready to throw on the grill. Fire up a juicy ribbeye. Grab creamy potato salad and savory flatbreads from the prepared foods department, and round it all out with three hundred sixty five brand condiments, chips and dips at everyday low prices Whole Foods Market, makeake your summer sizzle. This message comes from Capital One Commercial Bank Your business requires commercial banking solutions that prioritize your long term success withith Capital onene. Get a full suite of financial products and services tailored to meet your needs today and goals for tomorrow. Learn more at capital. one slash commmercial member FDIC Hello. In today's podcast, we're asking the question, what do you think of when you think of investing ast two nineteen nineteen. Do you picture a noisy trading pit full of people yelling buy and sell Or maybe a more modern city of London full of sleek buildings and sleeker men and women When do you picture someone sitting on the bus checking their investment platform's app you picture your own pension? The government wants you to think of investing and picture yourself. In fact, it's appointed the Investment Association, alongside nineteen financial services firms, to lead an industry initiative to persuade people with savings to move at least some of that cash into shares. Now as a nation, we invest much less than in other similar countries So what's going on? Our reporter at Joe Krasner has been speaking to people in Liverpool to find out We're in a situation where prices are rising and mortgage rates are increasing, etcetera. So overall there's a little bit more of a I thought process behind keeping money aside for that and the need in casees easy access to money rather than going through an investment s of portfolio or needing to pull it back out again with the risk that obviously what goes in could also become sort of less than what was invested as well. I try to save something from month to month, but you know sometimes it's different know depending on my expenses each month. Do you invest? I have cash er but I have not invested in stocks and shares, I think really for fear of losing everything. although I know that in theory that if you keep it long enough, you should make more money than leaving it sitting in a bank account. Is there anything that would encourage you to invest more? I guess if I knew that I wasn't going to lose everything that I was investing, I might be more inclined to take a chance So what do you think? What puts you off and what would you need to take the plunge? Get in touch. You can email us. It's moneybox at bbc. co. uk or send us a message or a voice notote on WhatsApp. The number is zozo three zero six seven eight three one eight three Now let's talk to Karen Nory, who's director of corporate Affairs at the Investment Association, which represents the investment industry and is leading this campaign. Karen Hello You also did ten years, I should say, at the regulator, the Financial Conduct Authority. So you have seen this from some different positions Explain what this new campaign is and why you think it's needed Yeah, I think If you get to the heart of it, I think in this country, so many people, when they do imagine investing, they just don't see it's something for them. you know is something that we really need to break down because I think as you mentioned, you know, there are lower levels of investment in the UK than there were elsewhere. But actually for individuals, it makes a big difference to their long term future if they're invested versus leaving large amounts of money in cash. The reason we've sort of you know the government initiated this and this is very much an industry led and industry funded campaign, but it is to take that educational point. So it's not a commercial campaign. It's not say invest in this or invest in that. but to sort of change mindsets to convince more people that investing can be for someone like that Well we're going to get into some of the whether it can be, whether it always is very shortly. Around seven million adults hold over ten thousand pounds in cash savings. That's according to the FCA. So I suppose those are the kinds of people you're targeting. I can understand investment platforms wanting us all to invest more. They make money from our fees after all. but Isn't this also about benefiting the government? becausecause growing investments means more money going into the economy? Isn't that the motivation here I think it is actually twofld. and I think there is a benefit for the wider economy. I think people don't necessarily realize what investing actually does, but it's putting money into companies that pay taxes, that hire people, create jobs. And that is great for the overall economy. But it also has long term impact on individuals who are doing the investing, they'll have more for their retirement or for whatever their long term plans are. We see it very confidently. There are no guarantees people do have worries, don't they Here's what one money boookx listener had to say Hi Mononeybox Live. It's Kath from Bingley here It's okay being told to invest by someone who has plenty of money But someone like me who is risk averse and grew up poor, isn't going to risk their hard earned cash Invest in British infrastructure Not likely. Kath, thank you very much, indeed for that. We've also had a message from Gerald in Nottingham, who says, someome of us have the kiss of death with shares. I don't think anyone should invest what they're not prepared to lose. We heard, Karen, from many of the people in Liverpool worried about the risk It's not that some people don't know that investing isn't an option, it's that they don't fancy the risk Yeah, I think that's probably true. And I think that you know fear and you fear of risk is definitely one of the reasons that we know that people aren't investing. But I think It's important and part of the objective of the campaign is to make it clear it is not about taking all the money that you have and putting it in one share, that one company that may lose you all your money. This is about small amounts. You can start with a very small amount. You don't have to invest everything. It is important for people to still have cash for their you know emergencies or you know their day to day expenses. But recommend about six months worth of income in cash savings, don't they? Yeah, I mean, there's lots of different variations, but definitely. And so the campaign is very much focused. I think you use the number ten thousand pounds and above. So these are people sitting in more than ten thousand pounds in cash. And You know, that doesn't mean that people should take that whole ten thousand and invest it. but It might mean, you know As low as five pounds, ten pounds, twenty five pounds a month, whatever it is that is available, and just get started. know littleittle and often often is the best way to think about these things. It's not an all or nothing kind of scenario. Well, joining us throughout the program today, Karen is David, Dodgson, an independent fininancial addvisor with the private Office, David, hello. Thank you for being with us It's a really interesting point Karen's making, isn't it? But we've seen higher interest rates recently, which have made savings accounts seem more attractive. and also, I suppose Geopolitical unrest in Ukraine and the Middle East that all contribute to making some investments seem riskier I'm sure it does for La, yes, it's bound to really, because it does mean that stock markets do, let's say, fluctuate quite a bit during those periods of geopolitical uncertainty But fromom what Karen was saying and I completely agree with you, it's about thinking about the long term And the fact of the matter is if you commit to the long term with this sort of investment, you'll be in a much better place to actually overcome that volatility and those bumps in the road that you'll definitely experience if you invest in stocks and shares based investments. That's certainly the case. Well, Karen, you've decided to front this campaign with a squirrel. Now, Paul Lewis played some of that campaign on Saturday Let's just have another listen though. This is one of the adverts Sabvy screw here Investing is like exercise It can be daunting to get started, but once you make a move, you're well on your way and the long term benefits are well worth it. So some of the same messages that you've been bringing Karen and you're running road shows, I think starting in Wales today, you've had stunts like free taxi rides if people will get in and talk about investing What are you actually doing to reach people across the UK with this message? Sure. So the campaign is just kicking off and so you'll start to see Sabby this girl out and about But in terms of you mentioned, you know we launched in Manchester with a series of taxi cabs where you can get in and have a conversation about investing today starting in Cardiff at the coffee spot, it's been rebranded as the second sp. But Apart from those stunts, what are you doing across the country? And so part of it is around people talking about money And I think this is the big thing. So whether it's because you see an advert or because you see, know you go into a coffee shop, the message that we are getting out and we are try you know through the advertising, which will build over time is, you know start having those conversations, start talking about investing. It's not something that people talk about But we know from our own research there's lots of interest in learning more. and people feel more comfortable when they've had a conversation with someone they know about investing. But people aren't having those conversations. A you actually woefully behind the times a bit with this campaign. You're offering a squirrel advert and coffee shop pop ups. Teenagers are trading crypto online using apps. Is this whole campaign just a little bit T you I think we, you know, it hits lots of different spots. So we have we are working with content creators on social media, but also There's a huge percentage of the population that aren't doing that. You know there might be young investors who are using apps and absolutely there are many ways that you can invest There are a lot that aren't and actually some of those ones who are not comfortable you know picking up an app are really important to hit as well. They're often the ones with large amounts of cash and they still have long term objectives, so midway through their career, et cetera. And so there's a lot of different people that need to hear a message and it's you know the objective of the campaign is to target those messages and deliver over time to the right audiences. And advice you find on social media, not always the best. I'm sure we'll get into that reallyally briefly, David. It's important to say, isn't it that invvesting is not right for everyone, notot like exercise, which is what Savby the Squirrel was kind of talking about, but investing isn't necessarily for every single listener. Not necessarily, you're correct. And there are other options that you have and other priorities. Some people want to reduce their mortgage, some people absolutely need to keep more cash available to cover for emgen emergencies, etcetera. So you've got to look at your broad financial position before you actually commit Liz has emailed a long list of reasons why she prefers to keep her money in a cash ISA. But she also makes a point that I think is quite interesting. She says, I'm concerned that if I did put money into shares, they would need to be with very ethical companies. I've not yet found a package of stocks and shares, which gave me the ethical reassurance I require. Thank you very much, Liz, for that. So the government has told us it wants to create what it called a new generation of Brits who are investing, making their money work harder for them. And we do already have some of what's known as retail investors, normal people investing. People like Moneybookx listener Robert in Essex Quite a few people only invest in cash isS these days where I've had a huge amount of fun and interest investing in the stock market over the last thirty years. and it's been a lot more profitable as well percentage on a cash ISO and I think I'm looking to gain probably nearer twenty percent a year on my stock ISIS. And obbviously there is a certain risk involved there, but with a bit of careful planning and probably initially using managed funds, people who know what they're doing from reputable companies. The risk can be relatively small and gains are considerable by comparison David, what do you see with your clients? What kind of income level do people typically start thinking about investing Well, if someone says to me, I'm after twenty percent per annum, I usually start managing their expectations to be honest. It really is more a case of looking at a rate of return that's above inflation really, because investment returns tend to fluctuate with inflation. and that's the key thing about investment is making sure that your wealth And your savings are not eroded by inflation over time. And there's plenty of evidence to let's say, prove the point that investing in stocks and shares over the long term, like Robert says, does the trick. Yes, in it for the long term. I feel like we're going to hear that a lot throughout the programme. Absolutely. We heard Karen from one of those people in Liverpool the start of the programm that investments aren't as easy to get your hands on as actual cash in an easy access savings account How long can it take to get your money out of an investment platform in an emergency I think it will probably depend on the individual product and platform that you have. because one of the things about investing is there are lots of different ways to do it and lots of different products. But David may be able to say more on his side it depends how you're invested to be fair. If you've got something that's invested in a portfolio of stocks and shares directly in stocks and shares, you've got to sell them down, settle them have the money paid out. So it could take up to five working days. With other arrangements, it can come out much more quickly than that. Okay whichich is all useful for people to know, isn't it I want to ask about how to actually invest, what the practicalities are, but I don't think we fully got into the why yet. Now Karen, you were talking about the value of savings being eaten away by inflation. Today we learned that inflation was about two point eight percent in the year to April Analysis from money factacts suggests savers have lost up to nineteen pence per pound saved in real terms since twenty twenty, simply because inflation significantly outpaced the rates they were getting on their savings Some of our listeners might be wondering though, doesn't inflation also eat away at the value of returns on investments Inflation being sort of as prices get more expensive, and I think the difference is If you take your money out after investing and you've had a certain percentage, sorry after cash, versus if you have know your returns over the long term if you invest. And I suppose if I give you sort of another set of, which might be easier to sort of or another way of looking at it, which is some of the research that we've done. So if you had put thousand pounds in a You had one thousand pounds to invest ten years ago, and you put it either in cash or you put it in a sort of diversified global equity fund, which is just sort of a collection of companies spread across the globe. In ten years, your buying power of that thousand pounds plus your interest would be about the equivalent of what you could have bought for eight hundred forty pounds. You know your buying power is eight hundred and forty pounds versus one thousand which you put in. So that's you get less. But if you'd put it into an investment, it would be closer to two thousand one thousand nine hundred seventy. Because of the returns are higher, it basically helps counteract the rising prices of inflation. Yes. And if you look back historically, typically that is true. invested in the longer term, but some of our listeners will be hearing that answer. They'll understand the theory, But they'll also be thinking that if they accidentally make a poor investment or if there is a significant market crash just before they need to get the money out, they could potentially lose even more. What would you say to them So I think there's some really interesting research and it's one of my favoritees because it sounds like exactly like something I would do, which is invest at the worst possible time, know the day before a stock market crash. And Vanguard, which is an investment company, did some research, and they called it the unluckiest investor, which basically had you invested Going back to nineteen ninety seven, you know in all the worst possible times. So you know the day before the financial meltdown in you the day before the invasion of Ukraine, you know, COVID, et ccetera, et cetera. So if you had put in lump sums literally at each and every one of those sort of totaling up to, you know, they looked at forty five thousand over since nineteen ninety seven. Again, you know, your investment would still be worth two hundred thousand versus sixty four thousandars if it had been in cash. So But you're right. If it is something that you know that you're going to need right away at a certain date, you know you know we've talked about the long term, you know long term is what investing is for. This is where you can afford to ride out some of those bumps over time know If you know you're going to need the money for short term needs, then investing probably isn't it depends on individual circumstances. but it is around long term being able to manage those fluctuations. Long term. We've heard it again. Well, unlike most savings accounts of course, there are also costs to investing. Neil in Dorchester has emailed to say fees, costs and charges eat up too much of the money invested hisis recommendation is we should all stick to cash ices with any spare cash. David, just explain what kind of fees there can be and what you'd say to Neil I would say to Nil that he perhaps needs to do a little bit more research in terms of what the real cost of investing is. The fact of the matter is that there are certain platforms available that will deal directly with consumers, directly with savers and investors. and the costs of investment are extremely low. It may cost absolutely nothing to actually invest your money, But then on an ongoing basis, yes, you will be subject to an annual management charge. And if you're invested in as Karen mentioned, let's say, a worldld index tracker As Karen mentioned, the cost on that could be as low as nught point two five percent per annum. which when compared to the overall potential returns, which as we said are not guaranteed That is relatively low cost and worth worth the cost, I think. and it has to be borne in mind that we are not looking, a financial advisor would not say invest all your money. You have to keep a big lump of cash back to give yourself security in The ultimate cookout starts with the ultimate ingredients. At Whole Foods Met, no antibiotics ever burgers and kebabs are prepped and ready to throw on the grill. Fire up a juicy ribeye. Grab creamy potato salad and savory flatbreads from the prepared foods department, and round it all out with three hundred sixty five brand condiments, chips and dips at everyday low prices Whole Foods Market, Make your summer sizzle. I cashed out my entire four hundred one K thinking someone stole my identity. A fake email cost me my dream home after I sent my personal information to a scammer. My AI agent wired thousands to an account I'd never seen If Billions of people feel unsafe, that's no longer a security problem. It's an economic one. At Gen, we're building the trust layer for a more fearless planet with products and technologies from our global brands, Norton, Lifelock, Avast, and Money Lion. See it in action at genendigital. com . Okay, lots really, really lots of messages, lots of emails coming in. We're going to rattle through as many as we can. Jan from Devon has called us. At seventy seven watching my pension dwindle every year. Where should I relocate? about thirty thousand, please? Easy access, but simply to get better alue I have an icer Thank you. Thank you, Jen. David, I know you know we don't give share tips on this programme, so keep it nice and general if you can, but are there any options where Jan could get her money in a hurry if she needed it? or is a cash icer the answer for her I think that if she's looking at the short term, it has to be cash. It probably also needs to be a cash ICA, although she said she did already have an ISA she should be looking at a situation where perhaps put someone easy access where you can get some good rates at the moment. And also when you fix I think you can get up to four point seven percent at the moment. so that makes sense. So divide it, manage it and think about it and do a bit of research online or even in the newspaper I hope that helped. I'm sure it did. We've also had an email from John David. He asks, att the age of seventy nine, what do financial advisors consider to be a long term investment? O. seventy nine, I think the life expectancy of someone who's seventy nine is about eight or nine years on average. I would say if you're going to invest in stocks and shares, you need to do so for at least to seven years and I'd say give it a go if you've got some spare cash or just spend it and enjoy yourself. I mean, that's always good advice, isn't it? Karen, a lot of people do have investments even if they don't necessarily think about them because of course their pension will be invested. Do you think if more people understood investing, they might be able to engage more with their pension pots as well Absolutely. And I think you know a lot of people who say, oh no, I'm not an investor or investing is not for me actually are because you know with auto enrollment in place, you're likely to have if you're working pension from your employer that is actually an investment. know fininal salary pensions are a thing of the past largely with a few exceptions. but so people have these investments and actually knowing you have it, it does two things. One, it's useful to engage in it. so you know you have it. T you know, it might give you some comfort. You can go back and look how it's done. you know, you can see what's happened to it. you can see you are You know, you're getting your own real life example, but also it's a really interesting and it is a potential option if you do have a bit of extra money and you want to invest But you don't know where to start Something like just adding some extra money to your pension There's a way you can do that and that's tax efficient. So there's lots of different ways to invest and pensions are definitely one of them. Okay, we we've touched on some jargon, I think so far. So let's bust some now. Let's talk about the main types of investing, Karen. Once you've got your emergency cash, you've got some ready cash and you decide right, that's it, I'm going to start investing with the rest, you then need to understand the difference between what's called active and passive investing. So a managed fund versus tracking the market. just explain that Yeah. So I mean, there are actually many more, but if you're talking about a fund or you you know manager, that's someone an advisor making individual decisions about where that money goeses, what companies that's invested in, what infrastructure, et cetera. A tracker basically takes a stock market usually. So you take you know, the London Stock Echange, the Foty one hundred, the top one hundred companies the largest one hundred companies and it buys a proportionate share or the fund owns a part of all of those companies. And there's no know it just follows as the size of those companies grow in the stock market, so does the size of the fund. So it tracks the rise and fall of the companies on an exchange. As they've even mentioned a low cost way of investing. And you know that might be right for some people. An active one will be someone making a decision for and it could be, you know, I think we had a listener ask about sustainable funds or sustainable investment. It could be someone making a decision about which of those. I mean, there's lots of different trackers, but it comes to you Is someone making individual decisions versus are they following a set formula to track something? But David, if you do want to start investing, how easy is it for someone to potentially do it themselves? They need to go through a platform, don't they? Well, yeah, there are investment platforms that market directly to consumers. I won't name any of them, But the fact of the matter is that opportunity to invest is there And I have to say, if you're a first time investor, I think that I would go for what we call a passive investment that Karen was just explaining, because it's a very let's say low cost way to get market exposure, i. e to stocks and shares. And it also gets you used to that concept of let's say volatility of investment displines you and gets you the experience of how holding on to that investment for a long time is the best way of doing things. So potentially a way to dip your toe in. I would say so ye. But there can also be with an increased awareness of investment, an increase in risk, can't there? Because Chris has emailed And I'm afraid he was conned by an investment scam disguised as an advert. His words are being read by one of our teams. I fell for one of these, the ad was actually on a website linked to a page that looks like a national newspaper, even having the name of a real person who works for the newspaper as financial correspondents Okay, I lost two hundred and fifty pounds, but what is worrying is that I've since had emails and calls from organizations telling me they can recover the money. Almost a scam on a scam if you like. I have screenshots, etc, and I' contacted the website who haven't replied and the newspaper who have and are investigating Thank you, Chris, and I'm sorry to hear what you've been through. Karen, this is a real risk, isn't it? We hear so many devastating stories of investment fraud at MoneyBox. We know that it's a very fast growing area. If more people are told that investing is a good option M people could be vulnerable, couldn't they? How should they stay safe? What should they look out for Yeah, I think as a first port of call, I really recommend taking a look at what the fininancial conduct authority is saying on and some of the work that they have done and some of the sort of warning signs to look out for for example, is the company that's trying to advise you and get convince you to invest a legitimate company? Is it registered by the regulator? So anyone providing financial advice or financial products has to be regulated by the FCA? So there's some really great information there that people should be aware of And then I think there's a few sort of comment across lots of financial services things to keep in mind. If it sounds too good to be true, is the classic one, it probably is. if there's a huge amount of pressure put on you to do things. So I think, you know, yes, it's good to be cautious and really to take a look. and you know as I said, the FCA is probably a great first stop. Someone who signs themselves off as cynical of Farnham says is going to be a field day for scammers. David, there's actually a huge amount about investments on social media, often from some really charismatic and I've seen some of those people peddling risky investment opportunities sometimes alongside protein powder. There are risks there as well, aren't there? even if they're not outright scams Of course, there are. And I think that you've got to apply a bit of a sniff test, as Karen said, to anything that seems a bit too good to be true. takeake a step back and think, is that really going to be possible? The Chapu is talking about I think thirty percent or twenty percent returns per annum. Yeah, if someone's offering you that then step back and think about that, is it really possible? Karen really briefly, if you can, is there a real risk that younger investors are going to be more attracted by attractive people on TikTok than by Savvy the squirrel