The investment landscape has changed drastically over the last 5 years. Investments that once appeared to be rock solid have been exposed as ponzi schemes. People who once believed they had a fortune have had to sell their homes, boats, cars and jewelry because they lost everything. Even hedge funds turned over billions of dollars to the same investment firm because they had a sterling reputation, had consistently reported steady returns and promised to continue delivering those returns because they said they had a “secret sauce”. To learn how a well crafted ponzi scheme works, look into the Madoff scandal and you can see how he was able to keep the myth alive for so many years. If we had not had the 2008 stock market meltdown, chances are he would still be in business selling the myth. The show of wealth attracted more wealth and people lined up to put their money where they thought it would be safe and grow. All he needed to continue was a steady stream of new money.
The lure of worry free, healthy returns from a company with a reputation of delivering results lulled many people into complacency and limited their due diligence to reading the pamphlets and fictional financial statements. Even the SEC investigations, opened to satisfy reports of suspected fraud filed by astute financial experts, were closed because the SEC found “no evidence of fraud”. The SEC definitely has work to do to effectively enforce the laws.
Investors wanted to believe the myth that significant steady returns were achievable without risk and bought into the promise.
Now we have Robert Allen Stanford and the Stanford Financial Group with offshore accounts and Swiss bank accounts to help people hide their money. Another ponzi scheme crafted to fill the pockets and support a lifestyle for those in charge. The Stanford scandal is going through a post mortem which will continue for some time, along with criminal charges and a search for hidden money to pay back investors.
So where can you find safety for your money?
Many people have answers that promise safety for your money. Both of these ponzi schemes held the promise of worry free solutions to your investment problems. They promised big returns with little or no risk. It seemed too good to be true and it was!
All investments carry risk. Diversification can reduce catastrophic risk. Due diligence will help you to understand your investments and it is also essential for you to hold any investment up to close scrutiny. Seek out experts and people with opposing opinions and when someone promises what appears too good to be true, beware!
Many people are investing in gold to protect some of their wealth. Gold can represent an insurance policy against catastrophic financial loss. Gold has been and continues to be a safe haven investment during turbulent economic times. Perform your own due diligence so you understand what you are buying and when you are buying gold bullion, pay only 5%-20% over the spot price of gold. GovMint and BullionVault are two leading gold retailers that are worth checking out. GovMint is a great choice for those interested in buying gold bullion coins since they have the largest selection of gold and silver coins online.