There's no such thing as easy money

Phshing: There are usually plenty of red flags that the make-money-quick scheme is a scam.

Phshing: There are usually plenty of red flags that the make-money-quick scheme is a scam.

Scammers remain as active as ever, and there are still plenty of people who - despite continual warnings - are prepared to believe that they can profit by becoming involved in schemes that sound too good to be true.

Just this week, Wendy emailed me to ask my opinion on Bitcoin Loophole. She told me she had heard about it by watching former football star Greg Inglis on "The Project", and understood a person could earn up to $13,000 a week from the comfort of their own home.

Google is a great resource when investigating these scams, and it produced a wealth of information in quick time. The scammers had various websites, all claiming that Bitcoin Loophole is new cryptocurrency trading software that has been designed by "prominent investor" Steve McKay.

The trading software allegedly uses a "highly efficient programming algorithm" based on a so-called "Flock Principle" of economics. The platform's alleged creator, Steve McKay, apparently found a loophole, which enabled him to apply the economic theory to a basic computer code.

If you read further, ignoring the "invest safely now" signs that keep popping up on your computer screen, you will see comments from readers pointing out that Steve McKay is a non-existent person, and that alleged photos of him are stock images. I pointed all this out to Wendy, who told me that she had downloaded the app, and had already been contacted by a "broker".

There are red flags galore here. Firstly, if you had computer software that could make a guaranteed $13,000 a week by trading bitcoin movements, why would you be selling it? Furthermore, why would you need an army of salespeople? No, the sales team are there to foist this scam on an unsuspecting public.

It's really nothing new. Years ago, we regularly received brochures in the mail about computer programs claiming to teach us to successfully back the winners in most horse races, or to trade currencies. ASIC keeps knocking them down, but they come up again like nut grass.

An email from a reader in New Guinea asked if the OPEC bank in Canada was a good source of finance. New Guinea is always a fertile ground for scammers, and I asked my reader to send me what information he had.

The email was a shocker. It started: "OPEC Banhs (sic) international..." and then waxed lyrical about the unique lending offer. All my friend was required to do was "Wire $USD 500" to a bank account styled British Mint Corporation in Vancouver.

This was an obvious scam, but I have no doubt that some people will still be caught.

This may be time to remind yourself of some basic financial principles. There is no such thing as easy money, unless you receive a large legacy from your favourite uncle, or pull off the one-in-10-million-or-more chance of winning Lotto. There are no computer programs that can successfully pick racehorses or shares, and if there were, their owners would keep them closely guarded. The last thing they would do would be to offer such a program online to all and sundry.

The scammers must get some results, because they are always active. In the time it took me to write this column, I received six emails telling me how I could make an easy $10,000 a week investing in crypto currencies. They appeared to be triggered by my Googling Bitcoin Loophole!!

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Pension Q&As

Question. My 80 years old mother has got herself into a financial pickle.

She gets a part pension and had $200,000 in the bank, and lives in her own home worth $540,000. She recently committed to a retirement village property by paying 50 per cent of the value $187,000, in order for the home to be built, on the basis that she could sell her current home. Her home is not selling, the new home is almost finished, and she will have to start paying interest on the remaining 50 per cent.

If she moves into her new place before selling her current one - will this impact her pension? Does the current home become an assessable asset?

What is the best way for her to access the equity in her current home, in order to pay for the remaining 50 per cent of the retirement villa and perhaps draw on a monthly top up of her pension? What are the implications for her pension in any of these scenarios?

Answer. Your experience is a lesson to all seniors. Normally if you are relying on the money from the sale of your existing home to fund some or all of your new one, the contract you sign should be conditional on the sale of your current home. If your Mum needs to borrow then most likely she will need a reverse mortgage - as this won't require her to make any repayment until the house is sold. Of course the fact that she is not making a repayment means that it is more expensive as interest is charged on interest but if it is for a short period of time it won't make a big difference.

Just make sure you are aware of any early repayment penalties and of course there are normally expenses like property valuation and application fees that you can't avoid.

The other option you could look at would be to use the Pension Loans Scheme which would enable your Mum to borrow to fund extra income but which wouldn't give the option of a lump sum. Since your Mum is thinking about moving into her new home before she sells the old one, if she does get any type of reverse mortgage make sure that vacating the property doesn't trigger repayment of the loan. From a pension point of view your Mum can only have one principal residence, the other will be treated as an investment property - which is an assessable asset.

Question. My wife and I receive a full married age pension. We have no assets other than our house which we own outright. We are both aged in our 70s and are looking at selling the house, living with a daughter for about three months during which time we will buy a smaller house. During the three months the money received from the sale of the house will be parked in a bank account. We expect it will be around $500000.

How does Centrelink view this, and how does this affect our age pension while it is parked?

Answer Your home and up to 2 hectares surrounding it are not counted under the assets test. If you sell your home, the proceeds will be exempt from the assets for up to 12 months, as long as you are planning to use the money to buy another home. However, the proceeds will be deemed under the income test.

  • Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. noel@noelwhittaker.com.au