By Tony Kaye, Senior Personal Finance Writer, Vanguard Australia
Reserve Bank of Australia governor, Philip Lowe, put investors on notice earlier this month when he warned that interest rates were unlikely to rise here until at least 2024.
Record low interest rates have already resulted in the income return rates from basic fixed interest products such as term deposits being dropped to well below 1 per cent.
Average returns from basic cash products such as bank savings accounts are barely hovering above zero per cent.
So, it's not surprising that people wanting a secure and stable income stream may be enticed by investment products offering higher returns, especially when they're backed by well-known domestic and international financial companies.
But, be very careful.
A warning last month from the Australian Securities and Investments Commission (ASIC) about the rise of "imposter bond" investment offers in Australia is a timely reminder that you do need to be constantly on the lookout for potential scams.
This new wave of fraudulent investment activity is being driven by scammers, pretending to be associated with well-known financial products providers, who have been promoting bond investments they claim will deliver secure, high-yield returns.
According to ASIC, investors are being scammed after they complete an online enquiry form expressing interest in receiving investment advice, often via a third party or comparison website.
People who have decided to invest in these bogus bonds have been directed to transfer money into a bank account, only realising afterwards that the investment product is not real and their funds have effectively been stolen.
ASIC says these bogus bond funds "are raising not thousands, but millions of dollars from Australian investors".
"We remind investors to check that they are actually dealing with the company they think they are dealing with," the regular notes. "Do not share personal information online unless you can verify who is using the information and how it will be used. We are seeing a rise in suspicious websites that are simply lead generators for scammers."
And these scams are not just limited to bogus bond schemes. There has been an alarming rise in investment scams globally over the last year as cybercriminals have set up schemes to fleece investors hunting for higher investment yields.
The financial fallout from COVID-19 pandemic on many households has played into the hands of opportunistic scammers.
Recent data from the Australian Competition and Consumer Commission's (ACCC) Scamwatch revealed Australians lost more than $176 million in 2020 as a result of online scams, representing a 23 per cent jump over 2019.
Some of the common tactics being used by the bond imposter scammers include:
A first point to note is to reject all unsolicited approaches to invest in a financial product, even if they come via people claiming to be from a well-known company or a government authority.
Beyond that, there are multiple ways to greatly reduce your chances of ever being tempted into a scam.
The ACCC's Scamwatch website should be your first port of call to check out everything to do with investment scams, including news and alerts of current activities.
Also check ASIC's extensive Moneysmart list of companies you should not deal with.
Just taking a few basic precautions will go a long way to ensuring you don't get caught up in a scam.
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