
First Questions
- Is this investment too good to be true?
- Do the promised returns, justify the additional risks?
- Why am I here? What is wrong with traditional (stock/bond market) investments at this time?
- Does the business model make sense?
- What proof do you have that the implementation of the business model will be done correctly?
Jurisdiction Analysis
- Does the jurisdiction have a long history of protecting property rights?
- What is the probability of taxes increases in this jurisdiction?
- How stable is the currency now, and at the end of the investment period?
- Does the jurisdiction have a company’s register?
- Is this country safe, stable and non-controversial?
- How accessible is the country in which the alternative investment is located? (How hard is it to get there?)
- How strong are there KMC / AML procedures? The stronger the better. You do not want your good money to be mixed with any bad money.
Information
- Is their balance sheet and other financial information available?
- Are their auditor reports available?
- Who is their auditor?
- Is the board of directors public?
- Do they have an about us page with pictures of employees?
- What does the internet say about the person and the investment being considered?
- Is there a trustee? and how trustworthy is the trustee.? What documentation will their be to confirm the legal responsibility of the trustee?
- Is the firm registered with any industry associations?
- Is everybody flocking to these investments? (Warren Buffet : “be greedy when others are fearful and be fearful when others are greedy”)
History
- How long have they been operating?
- How have they been funded?
- Who has funded them?
- What is the history of the people involved?
- Type of investments: Some industries, unfortunately, are rife with unscrupulous people.
- How long has this investment model existed? Has it been tested in major financial crashes?
Legal
- Does the company emphasise arbitration over legal recourse?
- Are certain parts of the contract open interpretation?
- Are the contracts one-sided to start with?
- How easy is it for you to take legal action?
- What is legal protection available?
- How long is the typical court case in the country of legal recourse?
- Is there a financial ombudsman in this jurisdiction?
- How is this investment type regulated?
- Are there restrictions in your home country on which international investments you can invest in?
Tax Implications
- Are you fully aware of the tax implications? How is the income declared?
- Will you need accountants in both your home country and in the investment jurisdiction?
- Who will manage and pay for filing the tax returns in the investment jurisdiction?
- Is there a double taxation treaty between your tax domicile and the investment jurisdiction?
Relationship
- Do they have any non-disclosure restrictions in their contracts? Meaning do they ask you not to speak about the performance of this investment to others? (Indeed they do exist)
- How much “skin in the game” does the investment company have in the alternative investment?
Your financial situation
- What percentage of your assets are you investing in this alternative investment?
- Have you lost money on similar investments in the past?
- Have you discussed this investment with others?
Is your decision rational or emotional
- What assumptions are you making about this investment?
- Have you reflected on this investment proposal for more one week?
- Do the investment promoters use emotional hooks such as greed or fear or being left out?
- How hard are they trying to sell?
- Does the company create deadlines to invest? Or do they create the impression of scarcity?