Don't get caught out by the bamboo investment scam

Bamboo is a useful plant, but investing in a plantation won't make you rich, no matter what the cold-calling scammers say!

As an (unpaid) director of the London Cycling Campaign, a charity which does what it says on the label, I have been fascinated by the bamboo bicycle. I was a little disappointed to learn that only the frame is bamboo – the wheels, chain, gears, brakes and so on are conventional.

Even if the £1,750 price is beyond my piggy bank, the bamboo works because it dampens road shocks compared with steel, alloy or carbon fibre. And it shows this versatile material goes far beyond furniture. It can also be used in textiles, in the vehicle industry, as pulp for paper, for building, and a whole lot more.

There are over 1,500 varieties of bamboo. And there is also a fair number of scam bamboo companies claiming amazing investor returns.

An income of 24% a year!

A few months ago I wrote about so-called timber investments which promised – depending on the time of day – anything from 15% to 20% a year, often “guaranteed”.

Stuart, who cold called to sell bamboo investment, went further. He promised I would get an average annual income of 24%, plus a further capital appreciation of 21% after three years as a bonus.

Now this is all unregulated, so it seems the numbers can be plucked out of the air, but on £10,000 that would equate to an average of £2,400 every year, plus a further £2,100 in 2017. By 2018, I would have more than my stake money returned, so after that it was a free ride. Stuart promised I could have my returns paid anywhere in the world so the taxman would remain in ignorance.

He said I could start with £7,000, although adding that many “super-savvy investors” are putting in £50,000 or more. It sounded like the most wonderful golden goose. My role was limited to collecting the eggs as they fell – there was no effort in this “passive investment”.

Bamboo may be the fastest growing plant in the world, but if something grows fast and furious across many zones how does that make it such an amazing source of profit?

Stuart sidesteps the question, concentrating instead on how I shall own the land and could pass it on to my children.

Demand outstrips supply

Bamboo is a complex subject. Besides the varieties, there are the usual agricultural variables such as climate, soil type, and density of planting.

I never could find out where in the world my bamboo plantation would be. Or how many hectares I would have. There are no reliable figures on purchase costs or wages for labour.

None of that mattered, he implied. For “demand outstrips supply”. That's always the mantra when these cold callers are selling something. Even if true, all it means is that farmers in countries where it is cultivated – mostly Asia and South America, although some varieties grow in more temperate climates – will soon plant more.

The problem with the return promised is that most commercial bamboo is not big enough until after four or five years and it may not be fit to harvest until at least ten years after planting. The waiting period is because bamboo is a natural material which expands when the weather is wet and contracts when it is dry. This is not a good idea whether building a bike or a bungalow. But this can be minimised by leaving the bamboo to mature in the field and then giving it a further period in a drying shed. This is similar to timber – if you made a door out of freshly cut pine, it would warp and expand every time it rained.

Leaving all that aside, what would I get for my money? Stuart remained vague. All he told me was that I would be a fool to give up this wonderful money maker.

And where is the exit strategy from this apparently sure fire cash generator? There's a moment of silence before he tells me that because it is such a wonderful investment that keeps on giving year after year, no one would ever want to sell it.

Bamboo is fast growing. But not fast enough to replace the hole in your fortune if you fall for this one.

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