As we age, we are more vulnerable to financial fraud attempts. We have
worked hard to make sure we will not run out of money as we wander through
retirement. Remember, the world is a vast place, filled with billions of people
and just as many opportunities. However, occasionally, you will run into a con
artist who will try to take you for everything you have. You may be especially vulnerable
when you are venturing into unfamiliar territory – like the stock market. Of
course, fear of being scammed is no reason to cower in your bedroom. Use these
five recommendations to keep you – and your money – safe from crooks.
Keep your eyes open. Using an
ounce of prevention will prevent you from incurring some large losses later.
For instance, always ignore unsolicited e-mails and Internet chat-room messages
thaturge you to buy a particular stock now. At best, a con artist could be pumping
up the stock price before dumping shares. At worst, the recommendation might be
for a completely worthless stock.
Keep your distance from aggressive salespeople. You should
also avoid buying from salespeople who promise high returns,demand an immediate
response, or press for personal financial information. If you do run into a
salesperson pushing you to make an investment, ask for a prospectus and other
written information before you agree to buy. This will not only give you more
time to make an educated, thoughtful decision, it will also show fraudulent
salespeople that you’re not someone to be trifled with.
Be realistic. Just because other investors have gotten big
returns doesn’t assure that you will, too. In one con called a Ponzi scheme, early
investors are repaid with money from later investors, who ultimately lose their
money.
Be on the lookout for multilevel marketing scams. In these scams,
distributors or sales agents earn money for recruiting other distributors or
agents. Not only is this type of scheme doomed to failure (eventually, you’ll
be unable to recruit more new members) – it’s also illegal. Before signing up
for anything, print out all the information you can find on the company. Then
contact your state or local consumer protection agency to find out if the
company is legitimate.
Stick to what you know. If you’re
new to a particular industry, then research the industry and individual
companies before you invest. Be very wary of stocks that aren’t listed in
respected publications or on major exchanges. Be very suspicious if you encounter
a salesperson who is trying to push such a stock you. If you think that someone
is trying to scam you, you can report him to the Securities and Exchange
Commission in your area.
If a salesperson still will not relent, you can tell him that you never make
investment decisions without involving your attorney. Give him your attorney’s
contact information and request that he make a presentation to your attorney.
Dishonest salespeople will generally turn tail at this strategy, leaving you
and your cash unharmed.
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