Tuesday, August 17, 2010

PONZI SCHEMES: HOW TO DETECT AND AVOID THEM - Part 4

PARTICIPATION

If you have already given a salesperson your money for an investment, do not provide additional funds or reinvest without seeing an initial return on your investments. Promoters easily keep their scams continuously going by convincing their investors to simply roll-over their preliminary profits with the promise of an even greater return. While it does make sense to follow through with the investment for a certain period of time, be suspicious of salespeople that are reluctant to let you cash out after the first sign of success.

A product that offers an overly consistent return is a cause for concern. Also, an investment with a rising return or that gives remarkably steady returns, regardless of the current market conditions, should be a cause for concern. Especially during these economic times, it is common for even the most solid investments to experience fluctuation from time to time. Be aware even if you receive funds back, they may be from other investors.

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