Imagine the scenario.

A very hard-working and highly educated scientist has made a breakthrough with his new project. It is expected that his new device will have a huge impact on many people’s lives. We expect he is very excited.

He is an engineer with expertise in rocket propulsion, aerodynamics, chemistry, physics, and fluid flow. His particular speciality is delivering substances that decompose rapidly under certain conditions and produce gases which expand by heat of reaction. Today he has made a breakthrough by creating a device that can be delivered to women and children living in the most remote areas.

The hi-tech device is called a PFM-1 and if a child or mother steps on it, the resulting explosion neatly removes their foot from the knee down. If they are lucky they get to keep the other foot.

A lot of effort has gone into the science of maiming people using landmines and it takes a very special organisation to stop this horror. I had the privilege of meeting  Phil Halford who is one of MAG’s ‘ bomb disposal’ experts,  who estimates that during his time with MAG he has removed about one million devices, which were designed to change people’s lives in the most horrific way possible.

When I decided to support MAG, by donating the proceeds of my book to them, you no longer need to ask me why.

Since posting this blog I have been delighted at the response. It is good to know there are so many people who are willing to give generously to a very worthy cause once it is brought to their attention. To order the book and raise funds for MAG click here

Last year I made a commitment to write a book. Everyone I knew was told, so there was no going back. I should probably also thank modern communications technology even if it isn’t conscious of its own existence, because this is helping me to spread the word around more quickly than I could ever have anticipated.

The ‘Six degrees of separation’ refers to the idea that if a person is one step away from each person they know and two steps away from each person who is known by one of the people they know, then everyone is at most, six steps away from any other person on Earth.

I am not sure if the sixth degree has made the Dalai Lama aware of my writing, but he should know that my book, ‘How to invest better than the average primate’ is now available for pre-order, with publication due later in March 2010.

Under all normal circumstances I would love to give all my clients a free copy and an extra one to pass to a friend as it will be a valuable gift. However, I feel this would be a missed opportunity to do some good. I am asking for help raising funds for two life-changing charities. I know that many of you actively raise funds for your own good causes, so there will also be an opportunity to raise donations for these on the book reservation form.

When it comes to raising money for charity some very fit people run marathons, the tough ones climb mountains, while those who are mad enough decide to swim the Channel. I leave you to work out if I have either reached an age when I am no longer capable of enduring such hardships or if I have acquired a certain degree of common sense over the years!

Please pass the information to your friends and colleagues and in turn ask them to do the same before 20th March 2010 to benefit from the pre-launch order discount.

“This is a fascinating read. Michael Barr has certainly gone to great lengths to dispel some of the mysteries of investing. I really enjoy the way he uses analogies from everyday life to explain in simple language ideas that can quite easily be hideously complex to understand. Well done.”
D James Martineau FIFP
Certified Financial PlannerCM
Director, Morton-Wilson Limited

Michael’s book launch

“Michael Barr has written a straight talking, politically incorrect book that doesn’t require a degree in economics to understand. The two enemies of the investor; the financial institutions that ‘manage’ their funds and the investor’s own animal spirits are identified as the major culprits of wealth destruction. Michael Barr offers simple low cost solutions that the reader would do well to adopt.”
Craig Burgess DipPFS IMC
Managing Director
Blackstone Wealth Management Limited

The title of my book was inspired by a controlled experiment, in which chimpanzees made random investment selections by throwing darts at the Wall Street Journal. Their selections outperformed those made by the majority of professional fund managers.

The thought of a chimp successfully moonlighting as a fund manager, whilst mildly amusing, also serves to expose the shortcomings of the fund management industry.

The book’s style is designed to be entertaining and educational, a fundraiser and a great gift idea. My intention is to help the majority of investors trying to save their hard earned money without being ripped off or misled.

I explain why many experienced investors should review the way they invest and why they should challenge the advice they are getting from their advisers and stockbrokers.

One advantage of a book is the freedom to be able to write with more honesty than is often permitted in a magazine article. Often, the advice given in newspaper and magazine articles cannot be trusted when there is a cozy relationship with advertisers.

I have covered the set up costs so that the funds raised will not be reduced by high production costs. The book will be on sale soon and listed on Amazon.com. The way to maximise the value of donations is to have a high volume of pre-orders so we do not pay resellers costs and high pay-pal fees.

My named charities are UNICEF and MAG International. Most of us have heard of UNICEF’s work for children around the world.   MAG is an international humanitarian organisation clearing the remnants of conflict for the benefit of communities worldwide. MAG is co-laureate of the 1997 Nobel Peace Prize.

Preview Michael Barr’s Book

[How to invest better than the average primate]
Buy Michael Barr’s Book

[How to invest better than the average primate]

I often imagine the conversations between some advisers and their potential customers.  The scenario is the adviser opening with a leading question, “Would you rather pay me a fee or would you prefer I collected a commission from the investment I recommend?”

It does not take too much imagination to expect a reply of, “Well naturally I would much rather not pay a fee!”

Sensing a successful sale is in the air that afternoon, the adviser goes on to seal the deal with a seductive, “What I have done is to negotiate a special enhancement for you – adding a full 2% extra to your investment, but I don’t know how long the deal will stay open.”

I can see meetings run along these lines every day in homes and offices all over the country.  The clients initially feel happy because they believe they have got a good investment for nothing, but how does this really work?

The art of selling

I recently received an invitational letter from the Prudential.  I receive offers like this all the time but I know everyone has heard of Prudential.  The letter implied that the rates of commission on an Investment Bond were going down to only 7%.  For example, the sale of an investment for £10,000 or £100,000 would produce a commission of £700 or £7,000 respectively.  Not bad for an afternoon’s work.

It is for this reason that an adviser can afford to give up 2% of the commission. The important question to ask in these circumstances is, “where is this commission coming from?’  The answer is very simple; it is coming out of the investment.

I would say Investment Bonds are very much over-sold as they are an ideal salesman’s product.  I wonder how many would be sold if there was no commission?  I think the answer is very few.

I come across investors who are quite smart and they have told me they have been advised to look through the documentation for the ‘total expense ratio’ to work out the cost. Unfortunately, the financial services industry has revised the meaning of the word ‘total’, as some quite significant costs are excluded from this ‘total expense ratio’.

Commission-based independent financial advisers are due to be phased out by the end of 2012 but there is plenty of time to be misguided on costs. I recently listened to a Radio 4 programme where the public rang in and spoke to a panel of experts.  Of the three clients who called, two of them had been recommended Investment Bonds with high costs.  Investing can certainly be a minefield.

If the investment pays a commission, then more than likely the investment is expensive.

“Why do people create computer viruses?”
In December we sent an e-mail to clients warning of a virus threat. We said it was delivered under the guise of a Christmas e-card greeting from a friend. We received a ‘thank you’ from a number of people but others e-mailed to say this was a hoax.
Our source was reliable, although we were aware there are many hoaxes doing the rounds similar to this one. We came to the conclusion that perhaps this is a method that has been used before, but the threat is real for those who may not be aware.
It is worth remembering that when it comes to computer security that ‘Paranoia does pay!’ There are hundreds of thousands of viruses designed for different objectives. Most of them fall under the following categories:
To take control of a computer and use it for specific tasks - The most common type is a Trojan. These are usually downloaded unknowingly; mistaking the file is something else, such as a file sent from an instant messenger friend or email attachment.
Once the computer is infected (known as a zombie computer), the Trojan joins some sort of a private chat channel and awaits instructions from its “Zombie Master”. This Zombie Master gathers thousands of infected machines (referred to as a botnet) and uses them to mount attacks on web servers. The Zombie Master may want to do this to bring down a rival website, a figurehead website (number10.gov.uk) or it may be part of an extortion plan. “Send me £10,000 or your website will be offline over Christmas”.
To generate money - These types of virus often masquerade as free spyware or virus removal tools (rogueware). Once ran, these fake applications “scan” your computer and say it found some viruses (even if there aren’t any) and in order to remove them, you must pay for the full version of the application.
To steal sensitive information - These types of viruses can ‘sniff’ the traffic going in or out of a computer for interesting information such as passwords or credit card numbers and the data is used to steal your identity.

Here is technological anecdote or two to think about over the festive period!  Be careful with your gifts and gadgets…

GPS/ Sat nav
A couple had their car broken into while they were at a football game. Their car was parked on the green which was adjacent to the football stadium and specially allotted to football fans. Things stolen from the car included a garage door remote control, some money and a GPS .

When the victims got home, they found that their house had been ransacked and just about everything worth anything had been stolen.

The thieves had used the GPS to guide them to the house. They then used the garage remote control to open the garage door and gain entry to the house. The thieves knew the owners were at the football game, they knew what time the game was scheduled to finish and so they knew how much time they had to clean out the house…It would appear that they had brought a truck to empty the house of its contents.

Moral of the story:
Something to consider if you have a GPS - don’t put your home address in it. Put a nearby address (like a local church or the Police station) so you can still find your way home if you need to, but no one else would know where you live if your GPS were stolen.

Mobile phones
A lady’s handbag, which contained her mobile phone, credit card and wallet was stolen.

20 minutes later when she called her husband from a pay phone telling him what had happened, he said “I received your text asking about our Pin number and I’ve replied”

When they rushed down to the bank, the bank staff told them all the money was already withdrawn. The thief had actually used the stolen phone to text her husband, who was listed in her phone as her ‘hubby’ in the contact list.

Moral of the story:
Do not disclose the relationship between you and the people in your contact list.

Avoid using names like Home, Honey, Hubby, Sweetheart, Dad, Mum, etc….and very importantly, when sensitive info is needed always agree with each other you will ring and never request such information by text.

Since we brought you our ‘5 top tips for avoiding financial crime’ the criminals have been keeping busy, which means we have more advice to help you and your family stay safe and secure from financial crime.

Watch out at the Gym
Man goes to the gym.  After his workout, he saw his locker open, he flipped open the wallet to make sure all was in order.  Everything looked okay - all cards were in place.  A few weeks later his credit card bill came - a huge bill of £14,000!

When he called the credit card company for an explanation, they verified that there was no mistake in the system and asked if his card had been stolen.  He took out his wallet, pulled out the credit card; an expired similar credit card from the same bank was in the wallet.  The thief broke into his locker at the gym and switched cards. The credit card issuer said since he did not report the card missing earlier, he would have to pay £9000 of the total amount owed to them!

Q.  Why were there no calls made to verify the amount swiped?
A.  Small amounts rarely trigger a ‘warning bell’ with some credit card companies.  All the small amounts added up to a big one!

Be careful at Restaurants
Man in a restaurant pays for his meal with his credit card…The bill for the meal came, he signed it, and the waitress folded the receipt and passed the credit card along.  As luck would have it, the man took a look at the card and, unbelievably, it was the expired card of another person.

He called the waitress, she looked perplexed.  She took it back, apologised, and hurried back to the counter under the watchful eye of the man.  All she did while walking to the counter was wave the wrong expired card to the cashier, who immediately looked down and took out the real card.  No exchange of words — nothing!  She took it and came back to the man with an apology.

Make sure the credit cards in your wallet are yours…Check them every time you sign for something and/or the card is taken away for even a short period of time.  Don’t just assume it is yours.

…And don’t forget the Pizza shop
Man went to a pizza shop to pick up and pay for his order with his credit card; the young boy behind the counter took the card, swiped it, and laid it on the counter as he waited for the approval, while he waited, he picked up his mobile phone and started dialing.  The man noticed the phone because it is the same model as his own, but nothing seemed out of the ordinary.  He then heard a click that sounded like his own phone when it takes a picture.  The boy gave the man back his card but kept the phone in his hand as if he was still pressing buttons.  What is he taking a picture of?

It then dawned on the man: the only thing to take a picture of was his credit card; the man now pays close attention to what the boy is doing.  He set his phone on the counter, leaving it open.  About five seconds later, the man heard the boy’s phone beep; telling him the picture has been saved.  The boy just took a picture of the man’s credit card, had they not had the same kind of phone, the man probably would never have known what happened.  Needless to say, the man immediately cancelled his credit card as he was walking out of the pizza parlour.

DEVELOP THE HABIT OF CHECKING YOUR CREDIT CARD EACH TIME IT IS RETURNED TO YOU AFTER A TRANSACTION!  Never let your card out of your sight…….check and check again!  Beware of your surroundings and of what other people are doing when you are using your credit card.

Fraudsters have been targeting Royal Mail customers by intercepting their post. They get your junk mail and use the offers to apply for credit cards and loans in your name.

This fraudulent activity starts by directing your mail to another address using Royal Mail’s redirection service.  This should only be used to send mail from your old address to your new home when you move and is supposed to reduce the risk of identity theft. But what if it’s not you that’s redirecting your post?

A recent victim was the BBC sports presenter John Inverdale. He noticed he hadn’t had any post for a month, but as there had been postal strikes in his area, he put it down to that. It was only when he bumped into his postman he discovered his name was on the redirection list.

It really does pay to be friendly with your postman; if you are known and your face and name are connected to your property, he could be the first line of defence.

Go to our Five Top Tips for Avoiding Financial Crime document

Scottish Widows has  £70 million to give away

Scottish Widows paid out windfalls nearly 10 years ago when it de-mutualised.

It  is now searching for more than 33,000 policy holders who are still entitled to claim a windfall but will lose that right in March 2010.  Apparently, the largest unclaimed sum is £103,000!

If you had (or know someone) who had a Scottish Widows policy or pension contract, you should visit the dedicated website www.scottishwidows.co.uk/unclaimed or call the helpline 0845 845 0829.

The September newsletter is now available on the website; you can read it by following this link here

If you haven’t already please be sure to subscribe to my blog (instructions are available on the September 2009 newsletter on page 5- use above link).

I am looking forward to reading your comments.

Michael