In September, I came across a story that reminded me why I wrote MISSION: POSSIBLE.
In 2019, Ms Chou, a 55-year-old Australian, saw a Facebook ad for an investment opportunity, with an endorsement from the TV program Shark Tank.
After expressing her interest, she was called by the investment company’s supposed London office. The call fuelled Ms Chou’s interest, leading her to an initial $10,000 ‘investment’.
Initially, things went well, with great returns on her ‘investment’. But then things turned, and she was told she would need to add more money to avoid losing her original $10,000.
Many red flags have appeared at this stage, including finding out about an investment on Facebook (and one endorsed by Shark Tank). But the most enormous red flag is being told you need to deposit more to avoid losing existing money!
At this stage, it’s time to do everything you can to avoid things worsening, including contacting your bank and checking the helpful moneysmart.gov.au website for scams. Unfortunately, the prospect of losing money often triggers us to make all sorts of poor decisions. In this case, it led to Ms Chou turning the shocking $10,000 problem into a mindblowing $2.6million problem. She kept handing over more money, hoping they would release it all.
In digging her way out of a $10,000 hole, Ms Chou used her savings ($200,000), re-financed her properties ($1.5mil) and borrowed from family and friends ($1 million). Along with previous debt, Ms Chou created $3.8million in personal debt and terribly sad personal circumstances.
The real kicker to the story is that Ms Chou was an accountant and a former financial adviser.
There’s likely much more to this story than what’s been revealed*, but unfortunately, these stories aren’t unusual.
An easy takeout is to focus on how crazy she was, but I believe it’s the wrong takeout. Here are a couple of others to consider:
Firstly, we are all vulnerable to being scammed. And, as I mention in MISSION: POSSIBLE: ‘The most vulnerable are those who think they aren’t vulnerable. We are biologically hardwired to trust others – this is part of our survival mechanism (life would be painfully slow if we couldn’t trust anything or anyone) – but this also makes us hopelessly susceptible to being scammed.’ Bottom line: we should always be alert to scams (Chapter 5 of MISSION: POSSIBLE provides a checklist before ‘investing’).
Secondly, we should be mindful of our key roles with personal finance and avoid going too far off track (e.g. seeking investments on Facebook). I believe our key roles are to:
- Earn an income and save some of it (Part 1 of MISSION: POSSIBLE)
- Funnel the savings into suitable investments over time (Part 2)
- Plan for property (Part 3)
- Cover key risks (Part 4)
- Coordinate all of the above and stick to the path (Part 5).
On top of all the other things in our life, these roles are more than enough. We don’t have to add to the pressure by also taking on the investing part! I don’t totally dismiss the idea of conducting our own investments, but we must do it with awareness (I provide a checklist in the book), but often we are likely to do better by not doing it ourselves (investing is an unusual pursuit in that inactivity is often best!).
So, my takeouts from the story are to be always cautious of scams, focus on your key roles within personal finance and never use Facebook as a source of investments!
All the best for October and sticking to the path. The mission is absolutely possible.
Best, David
* This is an extreme story, and I tried to check the accuracy, but short of tracking down the poor Ms Chou, in this case, I have relied on the original abc.net.au article found here: Australians are losing billions in scams …
