Risky Investments: Rare Earth Metals
Rare earth metals are one of the many unregulated SIPP investments currently offered to pension savers. Different products allow investors to put their money in either the production or future sales of these metals. Marketers tout tremendous potential returns and paint rosy pictures of the cushy retirements that rare earth metal investors can expect.
Is a rare earth metal investment really a sure thing? Does the rarity of the materials involved suggest great value? Or is it actually demand for the product that’s rare?
Experienced financial professionals are quick to discount the word ‘rare’ when it is attached to the phrase ‘rare earth minerals.’ These materials are rare because they are unevenly distributed across the globe and fairly difficult to extract. None of these factors guarantees that the metals in question are actually valuable.
Rare Earth Elements Are Unregulated Investments
If you’ve put pension funds or cash into rare metals, you should have been informed that this is an unregulated investment. Rare earth investors do not receive protection from the FCA, the Ombudsman (FOS), or the compensation board (FSCS).
Mining and metal trading schemes are all considering ‘High-Risk’ investments. If your investment fails, no matter what the reason, there are minimal government aids available to help you get your money back.
The FCA has gone so far as to create a warning page regarding rare earth metals for potential investors. Though these investments are outside its jurisdiction, the FCA considers them so risky that special notification is needed.
The critical question with these sorts of high-risk investments is, can you afford to lose what you invest? If you’ve placed money in rare earth metals using a SIPP or SSAS, the odds are good that the answer to that question is “no.” What can you do to protect yourself from loss?