How to Protect Yourself Against Ponzi Schemes

Ponzi schemes can steal from even the most savvy investors. Ponzi schemes often offer high returns to investors by giving them profit the investment firm gets from new investors rather then actual profit gained from investments. Learn how to spot them and protect your money.

Difficulty: Easy

Instructions

1. If it sounds to good to be true, it probably is. Check out the investment firm, if they are promising record profits, especially regardless of how the actual economy is doing, be careful.

2. If you have been taken by a ponzi scheme and have unknowingly paid capital gains taxes on a fraudulent income, you may be able to recoup some of your capital gains on those fraudulent profits by talking to the IRS.

3. Research what they're promising you. Understand rather the investment strategy can possibly provide those kinds of returns.

4. Ask for transparency. Don't let the schemer refuse to give you information or proof. Often schemers will threaten to kick you out of the investment circle for questioning their methods. Always be careful of anyone trying to hide their methods, that is a big red flag.

Resources

• On The Money

[Wasatch]

on 1/5/2009 Good tips. 5* Always verify everything you can when investing.