How to Avoid Being Ripped off By A Ponzi Scheme Like Bernard Madoff Did To Many

Bernard Madoff will go down as the perpertrator of the biggest ponzi scheme in history with losses of some $50 billion dollars. But more was lost: lives, peace of mind, security. How can we avoid being scammed like this?

Difficulty: Moderate

Instructions

1. Think realistically - Many scams that are perpertrated feed on the greed of individuals. And even if it's not greed, but a desire to benefit others (along with yourself), caution should be used in giving money towards a scheme that GUARANTEES a growth percentage - even if it's on paper. As the stock market has shown, nothing is guaranteed. One group of churchgoers recenty lost millions due to listening, believing and investing in a "pie in the sky" investment proposition. They were promised INCREDIBLE returns. But in the end lost a lot of money. Only invest what YOU CAN AFFORD TO LOSE.

2. Diversify - In view of what many were told, no matter how good the opportunity was, NEVER put all your eggs in one basket. Many felt that the growth potential was so great that they wanted high returns for ALL of their money. But serious money managers will tell you, diversify. Don't put more than 20% of your money in fund/stock, etc. At least put some of it in low risk arenas, like CD's and bonds.

3. Ask Questions - Trusting their money managers led to the downfall of a lot of savings. When so much money is at stake it makes sense to do due diligence yourself before giving to your manager so much money to invest. Madoff was at the center of much questions, inquiries and doubt for many years. It makes sense to find out where your money is going.

Tips & Warnings

• Diversify
• Be Cautious and NOT Greedy
• Invest what you can afford to lose
• If a friend wants you to invest a LARGE amount of money into their business venture, find out why the BANK wouldn't give it to him.