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There are a million ways to lose money in this world, and the more spare cash you have and the less financial experience, the more tempting they appear to be. There are many poor value, crazy or even dangerous get rich schemes out there. So-called "can't lose" investment schemes, boiler room share scams, crackpot foreign property investments, hare-brained gifting pyramids and complex commodity schemes top the pile. There are also plenty which probably won't lose you your money, but will just fail to make it perform. Easy millions? Don't bet on it. Let's face it, if someone really has found a foolproof way to make big money quickly, then the chances are they are quietly getting on and doing it. Here are some to watch out for ... 1. Gifting pyramids Hundreds of women across Britain have lost money through an organisation called Women empowering Women (WeW). New members are promised returns of £2,400 if they 'invest' £300 to join. Like all such schemes, there is no investment engine to produce the returns, all the money is drummed up by the frantic recruitment of new members whose joining fee is given to those already inside. Eventually the pool of willing victims dries up, and the scheme collapses, leaving the recent recruits out of pocket. Pyramid schemes have been around for almost a century since Carlo (or Charles) Ponzi, an Italian immigrant arrived in Boston in 1919 and devised a scheme which promised to make money by trading vouchers in the European countries devastated in the First World War. Although Ponzi schemes are illegal in most countries, the law is fuzzy on gifting as opposed to contractual payments, and that is how WeW continues to operate. The Government has promised to toughen up legislation in this area, but in the meantime if you are asked to join such a scheme, contact your local trading standards office. 2. Boiler room scams Boiler room scams are simply illegal share trading operations. Someone phones you up to ask you to invest $10,000 in companies you've never heard of, and which subsequently turn out either never to have existed, or to be non-tradable. None of us would fall for such an obvious ploy, surely? Don't believe it. These people are super-persuasive, and the lure of riches can overcome any doubts. A recently-broken Thai based boiler room scam, using plausible and well-educated Britons as salesmen milked £520 million out of gullible investors culled from European and US telephone directories. In most cases there is little chance of ever getting your money back. 3. Financial chain letters These are Ponzi schemes update for the Internet age. The e-mail usually arrives from someone you know, and therefore gets right around your spam blocking software. The e-mail, which has been repeatedly forwarded, will say you are missing out on some fabulous investment opportunity, details of which will be sent to you in exchange for a payment to the person who sent you the e-mail. You are urged to copy the E-mail on to at least another dozen people, and in turn, you are promised, all those will send you an equivalent payment. There will probably be plenty of testimonials from respectable sounding investors, and even bogus authentication from some official agency like the US Federal Reserve. Again, it all sounds so obvious, but many are cleverly persuasive. 4. Advance fee fraud This is something that Nigerian gangsters seem to have made their own speciality during the last decade or so. One typical approach is for a letter or fax to be received from a plausible sounding bank official or lawyer abroad, saying that you appear to be the beneficiary of a substantial will from someone who may be a distant relative. Once you have responded, given personal details and started trusting that this is genuine, you will be asked to advance a fee to get the paperwork sorted out, or remove some other bureaucratic blockage. Once you have given some money, more will be demanded. Sometimes this is thousands of pounds, but it is always a fraction of the promised inheritance. Inevitably, the money is never seen again. Some of the larger scams have even involved face to face meetings in London hotels, bogus banks with their own professional looking websites, and enough corroboration to fool all but the most suspicious of punters. 5. You have won a free holiday... Every day, one of these things seems to fall through the letterbox. In many cases they are just a legal version of advance fee scams. There are two types. One is a scratchcard which always seems to reveal a winning symbol, and the other is an official looking letter with 'open immediately' emblazoned on it and a certificate visible through the envelope window taking you through to the final round of a 'competition'. Typically, you will be astounded to read that you have definitely won either a top of the range sports car, an all-expenses paid holiday to the Far East, a wide-screen TV or - and this is the crucial part - £200-300 of travel vouchers with a reputable travel agent. Travel vouchers are rarely worth their face value, in that they either offer you discounts off full prices which almost no-one ever pays, or can only be redeemed as a modest discount against a very expensive holiday. For that reason, vouchers seem to be the prize that most people end up getting. In order to claim your prize, you normally have to phone an outrageously expensive premium phone number, and wait to have your claim processed. In most cases the cost of this will exceed the value of the available prize, and on top of all this you added to a particularly valuable 'suckers' mailing list compiled by the scratch card firm. Once they sell it you will be deluged with an even wider variety of junk mail. It is possible to claim your prize by post - but you need marvellous eyes to see the small print telling you this. In most cases it really isn't worth the cost of a stamp. 6. Foreign property There is of course good and bad here. There are marvellous opportunities to buy holiday and retirement homes abroad for those who have a good knowledge of the country in question, speak the local language fluently (maybe not necessary in Dubai!), and have the energy, time and determination to get through the inevitable bureaucracy. However, those who allow themselves to be seduced by a hard sell, contract out all the work to local agents, don't speak the language and unaware of the legal implications are casting themselves onto the mercy of others. 7. Wine Drinking yourself into wealth has a certain appeal of course, until you realise that you cannot have your booze and consume it. The investment case for wine is simple, but extremely narrow. For 95 per cent of world production, whatever you think of the taste, there is simply no money to be made. Yet for a few reliably fine Bordeaux wines, such as Margaux, Latour Haut Brion and Chateau Lafite there will always be more demand than supply. How to get a part of that value is tricky. Buying en-primeur is one route, making a deposit with a wine merchant as the grapes are harvested and waiting two years for the wine to be made and acquire value. This has grave risks if the crop is poor, or indeed if the wine merchant goes belly up. Buying and keeping already produced wine offers more predictable though often thinner returns. However, it is absolutely vital to know your vintages and regions inside out. Indeed, unless you are already a serious oenophile, the cost in time of getting to the level of knowledge required may well be prohibitive. 8. Commodities Dealing in commodities is not for the faint-hearted. While such substances as nickel, cocoa, platinum and orange juice are all required by modern economies, they produce no income of their own, and all gains or losses are down to guessing price movements. The price volatility and constant monitoring required are a drain on the nerves, and the consequences of an error in futures markets are a serious drain on the wallet. Indeed, you cannot really begin to play unless you have £20,000 to spare. During times of high inflation there is an argument for looking again at such investments as a hedge when financials fare poorly, but for most of the time they are best left to professionals.
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