Tuesday, April 19, 2011

Avoiding Investment Scams

by Tom Zachystal

You have worked hard to build a nest egg and would like to invest your money in order that it work for you to provide for the lifestyle you desire; but while searching for investments or investment advisors you find it difficult to know who to trust or which investments might be appropriate for you. Many people find themselves in this situation and some end up being taken advantage of by smooth-talking sales people masquerading as investment advisors.
In this article I highlight three scams we have seen over the years and point out warning signs to look for so that you are not caught unawares. This list is far from comprehensive so if you are uncertain about a prospective investment then I invite you to contact me directly and I will evaluate it for you, often at no charge.

Scam #1: The Boiler Room Sales Person

Suppose someone called you on the telephone saying he was an investment advisor and wanted to give you some free investment advice so that you could evaluate his effectiveness. Suppose he called you once a month for five months and each time gave you one stock to buy or sell that month and each month his advice worked out – when he told you to buy the stock he picked for that month went up, when he told you to sell it went down. After five months, or maybe less, you might be willing to entrust some money to him to invest on your behalf and if you did this you would likely find that the 100% track record he had in the past did not continue.

Let me explain how it is possible for someone to give you perfect investment advice for five or more months in a row: There is a person sitting somewhere with a telephone and a list of numbers they purchased from firms that supply leads. He spends his...

Article continues: www.expatfocus.com/tom-zachystal-180411

1 comment:

Commodity Exchange said...

good article for finance