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What is a Ponzi Scheme?
To avoid getting pulled into this, one of the most common investment traps, do your research.Check to ensure that the investment you're considering is reputable.Avoid investments with surrender charges, illiquid investments and upfront commissions.Surrender charges can be worked with if you're in good health (and expect to be for the next few years), aren't planning to move for at least a few years and will be married for at least a few years.Investments with surrender charges depend a lot on time.They change depending on your life circumstances, and unless you expect those three things to stay relatively stable you will likely want to look into a different investment plan. Illiquid investments aren't the greatest in that they offer higher returns, but those returns can be difficult to cash in.So unless you know how to work the system or are alright with slow, complicated returns then once again, keep looking! Upfront commissions are one of the worst investment types.Once your advisor has received your money, he loses incentive to continue providing you service.You could easily be tricked and/or receive very poor returns.Real estate is, of course, an exception as continuing service is hardly necessary anyway. A few other schemes and tricks in the investment business to look out for include: Those are just a few of the most commonly used scams out there.Plenty more exist.However, this shouldn't put you off investing!There are also many legitimate companies with reasonable returns and everything you could want out of an investment.Just look closely and avoid anything that could remotely seems like what is a Ponzi scheme, affinity fraud, senior investment fraud or whatever else.Also stay away from up front commissions and the like.Once you sort out the false or misleading investments you'll be left with plenty of real ones to choose from.Find the best for you and start investing! |
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