Could you invest and find real sunken treasure?
by Jonathan Maitland, presenter of the Tonight programme
2 January 2011
The odds of finding booty on shipwrecks may be minimal, but such schemes - or 'search and recovery investment opportunities' - are becoming more popular...
It's not often your financial adviser makes you smile - they are not natural entertainers as a rule - but mine had me chuckling recently. We were discussing 'exotic' investments when he suggested putting money into a scheme that recovers treasure-filled shipwrecks.
I replied that investing in modern-day piracy was a bit like asking Bernie Madoff to look after your pension.
But the joke then appeared to be on me when he said that another client, an accountant from St Albans, Hertfordshire, had put ÂŁ100,000 into the scheme last year - and was about to reap a windfall of ÂŁ1.4m.
A centuries-old vessel containing a huge haul of valuable coins had been discovered at the bottom of the Atlantic and he was looking forward to telling his client the good (and bad) news. 'Congratulations, you are now a millionaire. And you have a large tax bill'.
The odds of finding booty on shipwrecks may be minimal, but such schemes - or 'search and recovery investment opportunities' as they are prosaically called - are becoming more popular.
There are now at least half a dozen salvage companies trawling international waters for treasure - and your money. These schemes claim that many thousands of merchant ships, often laden with fantastically valuable cargo, have gone to the bottom over the past 500 years.
For example, there is SS Republic, an American Civil War paddle-wheel steamship that was found 1,700ft below sea level in 2003 off the coast of Savannah, Georgia. Odyssey Marine Exploration (OME), one of the world's biggest salvage companies, recovered 14,000 objects and 51,000 gold and silver coins from the wreck. It has so far netted more than ÂŁ30m from the haul.
This all sounds exciting for wouldbe investors, until you look at the deal offered by such companies. The costs of research, exploration and recovery are huge - some salvage outfits spend up to ÂŁ13m a year on it - so they will often keep much of the money generated by a discovery. Up to 90% of the first $50m (about ÂŁ32m) from a haul might go to the salvage company, and after that it might be a 50-50 split.
Another reason to treat these investments with caution, unless you have money to burn and you like an extreme investment punt, is that the great news may not be quite as great as it seems.
The exciting discovery of a shipwreck bulging with goodies may be merely the prelude to years of expensive, profit-sapping legal wrangling. This is what happened when OME found a 19th Century wreck in the Atlantic in 2007.
Coins, ornaments and jewellery on board were estimated to be worth ÂŁ250 million. But the euphoria quickly evaporated once Spain claimed the vessel might be the Nuestra Senora de las Mercedes, a Spanish frigate sunk by the Royal Navy off Portugal in 1804.
Since the discovery, both sides have been locked in an ownership battle that shows no sign of ending. As a result, the goodies have yet to be divided up.
Indeed this may be the fate that befalls the accountant with whom I share a financial adviser. When I rang the adviser to ask when the details of that lucrative find would be announced, he told me that 'things have been put on hold for a while'.
And if all this hasn't put you off, the minimum investment is rarely less than ÂŁ25,000, although there are tax benefits. There are alternatives, however, all of which are cheaper, less stressful and likely to produce quicker results.
Instead of buying into what is, in effect, a profit and cost-sharing agreement, you could simply invest in a salvage company's shares, as many of them are publicly quoted. OME, for example, which trades on the American market, has seen its share price double in the past three months.
Or perhaps you could also work up a new TV format, based on diving for buried treasure, which is why my bosses at ITV will soon be getting a proposal for a programme, Twenty Billion Pounds Under The Seas.
Or you could simply forget the oceans, buy a ÂŁ200 metal detector and head for the hills - the most enjoyable and most cost-effective option.
What to remember when investing at the deep end:
• Ask an independent financial adviser to assess the merits of the latest schemes.
• Remember there is nearly always a steep minimum investment - usually about £25,000.
• Look for the silver lining - even if nothing of value is found, the investment can reduce your tax bill.
• Don't hold your breath in the highly unlikely event that something is found - the investment will be a success only once the cheque is actually in your hand.
Read more: http://www.thisismoney.co.uk/invest...rticle_id=520699&in_page_id=166#ixzz19vhwKmsb
by Jonathan Maitland, presenter of the Tonight programme
2 January 2011
The odds of finding booty on shipwrecks may be minimal, but such schemes - or 'search and recovery investment opportunities' - are becoming more popular...
It's not often your financial adviser makes you smile - they are not natural entertainers as a rule - but mine had me chuckling recently. We were discussing 'exotic' investments when he suggested putting money into a scheme that recovers treasure-filled shipwrecks.
I replied that investing in modern-day piracy was a bit like asking Bernie Madoff to look after your pension.
But the joke then appeared to be on me when he said that another client, an accountant from St Albans, Hertfordshire, had put ÂŁ100,000 into the scheme last year - and was about to reap a windfall of ÂŁ1.4m.
A centuries-old vessel containing a huge haul of valuable coins had been discovered at the bottom of the Atlantic and he was looking forward to telling his client the good (and bad) news. 'Congratulations, you are now a millionaire. And you have a large tax bill'.
The odds of finding booty on shipwrecks may be minimal, but such schemes - or 'search and recovery investment opportunities' as they are prosaically called - are becoming more popular.
There are now at least half a dozen salvage companies trawling international waters for treasure - and your money. These schemes claim that many thousands of merchant ships, often laden with fantastically valuable cargo, have gone to the bottom over the past 500 years.
For example, there is SS Republic, an American Civil War paddle-wheel steamship that was found 1,700ft below sea level in 2003 off the coast of Savannah, Georgia. Odyssey Marine Exploration (OME), one of the world's biggest salvage companies, recovered 14,000 objects and 51,000 gold and silver coins from the wreck. It has so far netted more than ÂŁ30m from the haul.
This all sounds exciting for wouldbe investors, until you look at the deal offered by such companies. The costs of research, exploration and recovery are huge - some salvage outfits spend up to ÂŁ13m a year on it - so they will often keep much of the money generated by a discovery. Up to 90% of the first $50m (about ÂŁ32m) from a haul might go to the salvage company, and after that it might be a 50-50 split.
Another reason to treat these investments with caution, unless you have money to burn and you like an extreme investment punt, is that the great news may not be quite as great as it seems.
The exciting discovery of a shipwreck bulging with goodies may be merely the prelude to years of expensive, profit-sapping legal wrangling. This is what happened when OME found a 19th Century wreck in the Atlantic in 2007.
Coins, ornaments and jewellery on board were estimated to be worth ÂŁ250 million. But the euphoria quickly evaporated once Spain claimed the vessel might be the Nuestra Senora de las Mercedes, a Spanish frigate sunk by the Royal Navy off Portugal in 1804.
Since the discovery, both sides have been locked in an ownership battle that shows no sign of ending. As a result, the goodies have yet to be divided up.
Indeed this may be the fate that befalls the accountant with whom I share a financial adviser. When I rang the adviser to ask when the details of that lucrative find would be announced, he told me that 'things have been put on hold for a while'.
And if all this hasn't put you off, the minimum investment is rarely less than ÂŁ25,000, although there are tax benefits. There are alternatives, however, all of which are cheaper, less stressful and likely to produce quicker results.
Instead of buying into what is, in effect, a profit and cost-sharing agreement, you could simply invest in a salvage company's shares, as many of them are publicly quoted. OME, for example, which trades on the American market, has seen its share price double in the past three months.
Or perhaps you could also work up a new TV format, based on diving for buried treasure, which is why my bosses at ITV will soon be getting a proposal for a programme, Twenty Billion Pounds Under The Seas.
Or you could simply forget the oceans, buy a ÂŁ200 metal detector and head for the hills - the most enjoyable and most cost-effective option.
What to remember when investing at the deep end:
• Ask an independent financial adviser to assess the merits of the latest schemes.
• Remember there is nearly always a steep minimum investment - usually about £25,000.
• Look for the silver lining - even if nothing of value is found, the investment can reduce your tax bill.
• Don't hold your breath in the highly unlikely event that something is found - the investment will be a success only once the cheque is actually in your hand.
Read more: http://www.thisismoney.co.uk/invest...rticle_id=520699&in_page_id=166#ixzz19vhwKmsb
