Possibly not a complete scam, but you’ll still lose big time

Unless you inherit a pile of money, there are probably only four main ways to have a good standard of living in Britain – marry someone rich; convert to *sl*m and live off benefits; work for your money; make your money work for you.

Then there are probably five main ways of getting your money to work for you:

1. Put it in a bank or building society but get little to no interest

2. Buy some shares either directly or through a unit trust or pension scheme. If you’re lucky your money will grow by 2% or 3% a year

3. Get into buy-to-let property and make 5% to 8% a year

4. Become a trader buying and selling shares, currencies and commodities. Possibly you’ll make 20% or more a year if you’re any good

5. Start spread betting. With this you can easily double your money, triple your money, quadruple your money each year. But you can also bankrupt yourself within a few days if things don’t go the way you expect

Get Rich seminars: Some  readers may have received emails from companies offering free 2-hour workshops where they can, for example, DISCOVER HOW TO GET SMARTER WITH YOUR MONEY AND GET OUT OF THE RAT RACE

These workshops may be about spread betting, property investment or even something more exotic. But most use the same sales process:

Step One The FREE workshop – here the presenter will claim that they are a successful investor who once had a 9-5 job but are now financially free as they’re making so much money and they’re going to let attendees in on the secret of how they got so rich. They may even show you photos of what they claim is their house and their holiday home. Usually their claim to be a successful investor is a lie. One guy I saw presenting is a failed Canadian musical actor, another is a free-lance motivation consultant. And they don’t explain why, if they have so much money, they’re bothering to turn up at a third-rate hotel in your area trying to convince you to get in on whatever scheme they’re selling

The first part of the FREE workshop may let you get a glimpse of some techniques for making money. But most of the time is dedicated to getting you to sign up for a 2-day course. You’ll be told the 2-day course is ‘worth £3,799’ or even £4,899, but that if you sign up there and then, you’ll only have to pay maybe £970 or £500 or even less. You’ll also be told “there are a limited number of places” – all lies of course

Step Two The 2-day training I’ve just been on a 2-day training in spread betting. The training was supposedly worth thousands of pounds, but I paid only £97. Some attendees paid a mere £50 for the 2 days. There were about 40 of us. And next weekend there will be another 90 attendees

I have to admit, the course was good, even amazing. I was more than impressed. The principle was really smart. Instead of trying to understand which shares or currencies or stock markets would rise or fall, all you needed to do was identify patterns of human behaviour and use these patterns to place bets on rises or falls. For example, to simplify enormously, if a share started to rise, people would begin buying to get in on the potential profits and the price would rise further. Then those who bought early would ‘take profits’ by selling and the price would dip. But that dip would encourage other buyers so the price would rise again. Then the price would hit a top (resistance point) and start to wobble, That would lead to more people selling and the price would fall

So, if it’s so good, where’s the scam?

The scam is in 2 areas:

1. The fortunate few Firstly, I believe few people can do it successfully. But I’m certain that perhaps 2% or 3% of the attendees could make a lot of money because they had the right mental skills and psychological character to be successful spreadbetters. But most attendees were being lured into something where they would lose their shirts and much more

2. Yet another course Secondly, the main purpose of the 2-day course was to sell you a much longer training and mentoring programme which, you would be told, “is worth £20,000” or even £25,000 or even £30,000. But if you signed up immediately for one of the “few remaining places”, you would only pay say £15,000. But then later during the 2-day training, the presenter would claim that they’re “setting up a network of traders around the world”, that there were just 6 places left and if you agreed to take part in this network you could have one of the 6 places for just £9,700 – a massive reduction on the £20,000 or even £30,000 that the training scheme was supposedly “worth”.

Of course, once 6 people had signed up, the presenter had a problem – if 6 people had just paid only £9,700 for the training, nobody was going to pay £15,000. So the presenter claimed that a lot more people wanted to do the training and mentoring programme, that it would “be unfair” for them to pay more than £9,700 and so he would accept other people for the “few remaining places” at the same incredibly low £9,700. No doubt, the same story would be used on the 90 or so people attending the same 2-day seminar this weekend.

My conclusion The techniques taught would probably work for a very few lucky people who had the skills to be successful. But the scams were in how the training programmes were sold using the ‘closing door’ scarcity selling technique – “there are only 6 places left” and the unrealistic expectations created of vast wealth when most people would end up seriously poorer than when they started