# Is this a good deal?



## kathy9911 (28 June 2017)

Hi everyone

Wondered if I could get some opinions on this.

A friend of mine is a trader with a big forex company. He says he can offer a traders performance guarantee so that the minimum return on my investment is 12% p.a. 
its backed by his company and a legal contract. 

Anyone got any thoughts?

Thanks


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## basilio (28 June 2017)

Welcome to ASF Kathy.  Good to see people looking for some experienced comments before they jump into particular investment decisions.

*Just don't do it*. From every piece of experience I have had and I believe almost everyone else on this forum the risk of losing all your money with  forex trading is extreme. "Guarantees". "contracts" whatever are, frankly, meaningless. If and when it goes pear shaped you will not have the capacity to chase any such guarantees.

I'll see if I can find some examples of what has happened elsewhere  but forex trading is ultimately a zero sum game. One party wins the other loses. Either way you pay transaction costs and whoever is playing with the money.

Cheers


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## basilio (28 June 2017)

Some additional thoughts on Forex trading
http://www.smh.com.au/business/markets/the-dark-underworld-of-forex-trading-20150120-12uoi9.html
https://www.moneysmart.gov.au/investing/complex-investments/foreign-exchange-trading
http://www.cnbc.com/2015/01/16/forex-leverage-how-it-works-why-its-dangerous.html

You can certainly find stories suggesting forex trading can make you a bundle. But these will be the brokers looking for fresh meat.


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## skc (28 June 2017)

kathy9911 said:


> Hi everyone
> 
> Wondered if I could get some opinions on this.
> 
> ...




You are right to be suspicious, it certainly sounds too good to be true. No trader can "guarantee" profits, if they can, they won't need your capital. 

What is the name of the company? What is it's credit rating? How secure is the "guarantee"? Is your money actually safe?

Often dodgy operators get investor's capital and simply disappear overnight, with doors shut and phones and emails unanswered. Your friend may genuinely thought he/she is offering you a great deal... until he/she got locked out of the office him/herself one morning (or you find out that you didn't really know him or her).


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## Smurf1976 (28 June 2017)

So far as things being "backed" are concerned, well if something is backed by someone like BHP, Wesfarmers or one of the big 4 banks then that's potentially a useful sort of "backing" to have since at least the company does have serious money behind it and thus at least has the ability to pay up. Whether they actually pay is another matter, but at least it's possible. 

But if it's just backed by some comparatively small company that nobody's ever heard of then the backing isn't worth much in practice since the company will be broke many times over if the scheme does actually fail. As such the guarantee is worthless in practice.


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## kathy9911 (28 June 2017)

Thanks for all the help guys. Appreciate the words of caution. 

I have no doubt my friend is genuine. Ive known him for a long time. 

And I dont think the company is going to run off with my very small investment. They have offices in multiple country's. By no means huge but not small enough to be worth taking my money.

ive already invested some money that he has been trading for me the last couple of years without this guarantee. I know two years doesn't mean everything and things could change at any time but so far he has managed to get me well in excess of the 12% so I know its not impossible for him.

its just a nice little safety net I guess, if I could count on the guarantee, as you guys say. 

This seems pretty good to me. I was more asking along the lines of if it were true, would it be considered a good deal?


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## So_Cynical (29 June 2017)

12% p.a.

NO.


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## minwa (29 June 2017)

kathy9911 said:


> He says he can offer a traders performance guarantee so that the minimum return on my investment is 12% p.a.
> *its backed by his company and a legal contract. *




I'd be very interested to peek at the contents this "legal contract". As far as I know, in Australia, forex can not fall into a capital guaranteed product category like bonds.

So when this company makes such guarantee outside the law, this "legal" contract in effect should be useless - it's already outside the laws set by ASIC.

Multi offices in multi countries, so they should have a AFSL ? Last I checked guaranteeing returns in speculation is outside AFSL laws and this company will be in trouble with ASIC. If they don't have a AFSL then they are probably breaking the law there again.

Are you sure it's not something like a profit performance of guarantee of 12%+ per annum before they can collect fees - but a iron clad no terms/conditions seemingly-legal contracted return on your investment capital 12%+ ? Illegal - so no, not a good deal. Better returns out there if you are willing to invest in an illegal product.


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## kathy9911 (29 June 2017)

Hi minwa
thanks fir the reply. It is after fees. I dont know about any of those laws so ill have a lawyer look at it just to be sure.
so cynical, are you aware of better options? 
Thanks


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## pixel (29 June 2017)

kathy9911 said:


> Hi minwa
> thanks fir the reply. It is after fees. I dont know about any of those laws so ill have a lawyer look at it just to be sure.
> so cynical, are you aware of better options?
> Thanks



Hi Kathy,
congrats for asking before you jump. It's long odds you've saved yourself a lot of money.
From my experience, I'll support every one of the above warnings - even without reading the "contract". If it waddles, looks, and quacks like a duck, it ain't a Golden Eagle.

Just out of curiosity: Where does your friend's company have its registered address?


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## Gringotts Bank (29 June 2017)

kathy9911 said:


> I have no doubt my friend is genuine. Ive known him for a long time.
> 
> And I dont think the company is going to run off with my very small investment. They have offices in multiple country's. By no means huge but not small enough to be worth taking my money.




None of that matters.  

If you're even slightly uneasy, walk away.


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