When I hear that kind of returns my antenna all shot up! If this was really achievable in a big scale, you will be able to double your money every 2 years.
Or just put in $10k now and wait to collect a cool million dollars in 15 years. So it is a scam or a really good investment deal? Let’s explore more.
What I went through
They called my number and dangled a $100 Takashimaya voucher plus a bottle of wine to sit in a 60 mins presentation. Which such a good offer how not to resist? Especially if I like wine myself. So after work I went to their office at One Raffles Quay. Throughout the talk I kept asking about the investment amount and potential return but he refused to answer till he got to the end of the presentation. In the process he will ask what I invest in, what I like etc. Basically, to get more information out from me. That really frustrates me. Finally after about 60 mins he finally popped the investment offer. It was to buy S$5K of wine and will *try* to find a seller after 6 months with projection of 18% return. He says he if offering this “rare” opportunity to buy this good wine just to make investors comfortable dealing with them and the hope of more investment later. At this point of time, frankly I am very drawn to the deal. I mean 18% in 6 months lay.. where to find right?
But something is not right. if it is such a good deal, why wouldn’t they keep the investment to themselves?
Really nice office at TBW
Sales tactics
They went through the typical pressure selling tactics by luring you in with really good free gifts and having smooth talking Caucasian salesman to get information out from you and offer a good offer you can’t refuse. There is nothing wrong with giving you a good offer. But in the last process, they never talk about the product in the offer much. In investment talk, we call it “underlying asset”. They are only focusing on top line numbers like how little you need to invest and how much profit you will get. Little was touch on the actual VALUE of the wine you are buying with the $5k.
Value of the wine offered
Later at home, I did a quick research of the wines they offered me. For $5K they offered me:
42 bottles of 2009 Two Hands Coach house at $125/bot and
6 bottles of 2005 Rof Binder Heinrisch at $150
From my search online, I found out the first bottle is only worth $116 and second bottle is only worth $40 at retail! This means they are selling my wines that are overpriced by ~20 to 60%! So is likely the way they can buy back from you and still give you 18% gain! A classic example of overcharging upfront and selling investors the dream of a “high return” investment.
This overcharging tactics has been used in so many other similar grey investment. Like investment property that promises high rental yield and Gold investment that guaranteed 20%+ dividend.
So…
So next time you find yourself lured into really high return or high dividend investment, check very closely what is the value of the underlying product you are buying. Do a little homework to understand the business model and you should be able ride out any scam out there.
Extra reading: TBW: a Company with a history
They (TBW) said that they took over a scam related company called Australian Wine Index (AWI) and they are helping its old members sell their wines. They claimed that they are not obligated to help but want to do it to bring confidence to new investors.
From what I read, scam saga started in 2011 with AWI, which is really big and is not over yet! The previous investors have tried all means like reporting police, calling head offices etc to get back the money but to no anvil. You can read about the many affected here. It is so sad and painful to read so many local investors affected and not able to do much about it. So do you really want to deal with a company that have that kind of history?
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