Complementary and alternative investments

Many people with money to invest are interested in trying schemes that may help their money grow rather than just relying on conventional financial advice.

Investment schemes such as boiler-room investments, Ponzi schemes, online gambling, land banking, and Nigerian 419 schemes are usually referred to as complementary investments.

Because they have not been studied as extensively as conventional investments, there is little scientific evidence to show that complementary investments are effective especially when used on their own. That's why it's better to see them as 'complementary' and working alongside conventional investments as part of a balanced portfolio rather than as 'alternative' investments. If you are interested in trying one of the many complementary investments available, it's a good idea to speak to your financial advisor first.

Complementary investments should only ever be used alongside your conventional investments so it's very important that you don't stop making your normal investment payments unless your financial advisor advises you to. This is because suddenly stopping your normal investments can lead to a worsening of your financial position and at worse put you at risk of being scammed.

Boiler-room investments

Boiler-room investments are investments in small companies that are just about to hit the big time. They are known as boiler-room investments, because the companies selling the share are usually working on tight budgets and sometimes have to conduct their sales operations from the boiler room, as they are unable to afford expensive city premises.

If you invest in a boiler room investment at the right time, you can see your money multiply many times. However, there is not yet any robust scientific evidence that boiler-room investments outperform traditional stock market investing.

Ponzi schemes

In a Ponzi scheme (sometimes known as a pyramid scheme), you invest in the scheme, and money is paid back by subsequent entrants to the scheme. Many people can enjoy substantial returns from their investment, particularly if they are in at the start, although returns for investors to join the scheme later on may be disappointing.

Online gambling

Many people believe that they can make money fast by gambling online. Many forms are available, such as roulette, poker, or blackjack. Some people believe that they have a foolproof system for making money at roulette, although there is no scientific proof that it works.

Land banking

With a land bank, you invest in a piece of cheap agricultural land. Your lank banking advisor will let you know which pieces of land are a sure thing to get planning permission for yuppy flats. Once a piece of land receives planning permission, the value of the land can increase dramatically. However, research has not yet conclusively shown what proportion of land used in land banking subsequently increases in value, and what proportion remains worth far less then you paid for it.

Nigerian 419 schemes

Traditional Nigerian wisdom holds that it can be difficult to move large sums of money out of Nigeria, and many helpful rich Nigerians are happy to pay a substantial fee to complementary investors who are willing to help them. Typically, you would need to pay a nominal fee up front to help with paperwork and administrative expenses. No conclusive research has yet quantified the potential returns on this investment, although many people claim that they are substantial.

Links for further information:

Boiler-room investments

http://info.redhotpennyshares.co.uk/

Ponzi schemes

Bernie Madoff

Online gambling

http://www.888casino.com/

Responsible financing for your investments

http://www.wonga.com/

Important disclaimer

As I hope is already clear, none of the above advice should be taken even remotely seriously. Please do not even think about investing in any of the things I have described.

I just thought it would be interesting to imagine what an "alternative financial advice" web page would look like if it were written with the same attempt at false balance that we sometimes see from well-meaning but misguided organisations trying to explain alternative medicine.