Even though the article is the date, the information in this Kiplinger’s article is still relevant because it touches on a very important topic – how to avoid con artists and prevent them from stealing your nest egg. The interesting part about the article isn’t so much that someone fell for a Ponzi scheme but that it was their own “greed” that led them to their downfall. According to a study by the NASD Investor Education Foundation, “Seniors who were victims of investment fraud scored higher on financial literacy questions than nonvictims… They also tended to be wealthier, more educated and married.”
While that at first seems surprising, it’s not all that surprising when you consider the nature of the scams in the investment industry. They rely on you willfully giving them your money and they do that by tapping into your desire for more money, for a comfortable retirement, and because they offer you a once in a lifetime opportunity. The fact that those targeted are wealthier and more educated is not surprising either, these investment schemes are complicated, which appeal to the nature of more educated investors, and uneducated people may be put off by the complicated nature. As for wealthier, well that’s because wealthier marks make for higher returns!
Ultimately, the old adage “if it sounds good to be true, it is” still applies in force. Here are the tips Kiplinger’s gives:
- Be skeptical of promises of above-market returns.
- Recognize the trouble investments.
- Take your time.
- Insist on written information.
- Check out the adviser.
Definitely give the article a read especially the end where it lists how to protect yourself, you might just save yourself some money and some heartache.