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Ask Paul: Can we loan out $3.5 million through Facebook?

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Q. Is there anything stopping us (legally) from advertising via social media the offer of short-term bridging loans secured by a first mortgage?

It could be through our company or as individuals.

This is to invest an inheritance of around $3.5 million. – Cathy

A. Now this is interesting. I can say with confidence I have not been asked this in many decades of answering questions.

I suspect you would need some sort of broking licence.

I could find out quickly but I don’t plan to as I reckon this is a really, really bad idea.

To me it looks like a great way to turn a large fortune into a small one.

Cathy, given your question I assume you know nothing about this area. And it is full of more traps and alligators than a swamp.

I reckon you will have every crook and rogue in town contact you with false documents and dodgy valuations. Your money will be gone in a flash.

If you want to put a small part of your money in peer-to-peer loans, talk to the leading companies in this area.

They can manage the risks and loans. Yes, they will take a clip but that is better than losing your $3.5 million, which I believe you will.

With the rest, please protect your good fortune and make sensible decisions. This could be shares, property and particularly super.

Sorry to sound so negative but I hate seeing people go into unregulated areas they know nothing about and lose the lot.

Written by Paul Clitheroe

Paul Clitheroe

Paul Clitheroe AM is a respected financial adviser and Money’s chairman and chief commentator. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Ask Paul your money question.

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  1. Good advice Paul, though whether they listen is another matter. Why do people who have so much money want to “invest” (I use the term loosely) in such hare-brained schemes?!

    Is it because the human brain cannot deal with wealth that hasn’t been personally earned and instead, gifted? I mean, this is why most lottery winners go bust, it’s because they can’t handle the fact that they didn’t really earn it.

    If it was me, it would go into a nice, balanced mix of index funds of shares, property and some bonds….then go and live off the interest. But that’s me.

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