Safe “can’t lose” investments are usually bogus

RIP-OFF ALERT: At a time when savings accounts are paying puny interest rates and people are afraid of the stock market, I’m seeing a trend of fast-talking con people who are convincing others they have “safe, can’t lose” strategies for making big money. Don’t believe it!

First up, The Los Angeles Times reports the feds shut down a company in California that was supposedly selling death futures contracts (aka viaticals.)

Death future contracts are a sketchy area of the investing world where people buy the rights to someone else’s life insurance policy and then hope the original policy holder dies in a hurry so they can collect. On a personal and ethical level, I’m opposed to death future contracts.

But the field has also been fraught with business concerns over the years as well. Now we have this report that an organization called Christian Stanley was shut down by the feds for taking nearly $5 million from would be investors. The company’s founder allegedly spent the money on luxury hotels, fancy cars, nightclubbing and more.

When you’re being sold a weird investment like a death future, you have no way to know if the seller is representing that investment honestly because the market is unregulated. My advice is to just steer clear of these kinds of things.

If the economic disincentive is not enough, think of the ethical dilemma of hoping to make money on somebody dying in a hurry!

Meanwhile, Bloomberg reports that a Florida outfit was ripping off retirees and teachers by promising annual returns of 124% in private equity funds. But the crooks just took money and did no investing whatsoever. Instead, they produced false statements each month and then the whole thing collapsed with $22 million gone.

There’s a common theme here: Fast talkers are convincing individuals — at a time when nothing seems safe and safe means puny returns — that they have a way to make a fortune of money. Don’t believe somebody’s invented a new magic show that suspends the laws of economics and investing!