! Due Diligence: 10 Steps to Avoiding Ponzi Schemes and Financial Fraud
Karen C. Altfest , Ph.D., CFP, is a principal advisor and executive vice president of client relations at Altfest Personal Wealth Management, a fee-only financial planning and investment management firm founded in 1983 and based in New York City.


George Theodorakos from MO posted over 5 years ago:

I was a "victim" and didnt do my due diligence with Hammond Financial out of Florida...Mr Hammond was more of a salesman than financial planner.....

I still am asking how do I make sure someone has my best interest at heart....I live in st. louis and am looking for a reputable advisor who has my interest instead of making money for themselves....

Robert Ownby from AL posted over 4 years ago:

Very good advise.

Rudolph Heider from MO posted over 4 years ago:

In my opinion, nothing is better than doing and learning for yourself. Study the markets, read financial reports and learn from mistakes.

Patricia Treece from OR posted over 4 years ago:

I was advised by my tax man, a CPA and a financial planner, as well as employed by a venerable company, and my broker, who worked for a well-known brokerage to sell my bonds and get into stocks just before the big crash in the 1990s. My gut said don't; my mind said you are just a person with no expertise so follow these men, the second of whom you know has always dealt honorably with you. So I lost a very large sum and it took years to save up again. What I took away was even well-meaning experts often can't foresee what is around the corner. Since then I have managed my own money so I have only myself to blame for my investments. P Treece, Portland, OR

Vaidy Bala from AB posted over 4 years ago:

I live in Canad and the comments reflect the same human greed versus actual investor help. Do not be deceived by any number of titles. Always ask how many years experience, fees, references and success stories before parting your CENT. It is your money and take the best selfish interest to protect it and find out by doing the home work yourself against all others' claims.

Joe Meadows from TX posted over 4 years ago:

Patricia Treece's penulitmate sentence is pure wisdom.

Richard Dawson from UK posted over 4 years ago:

When I sold my farm I invested my money in stocks. I was inclined to do it all myself. Partly to convince my wife, I talked with a cousin - a partner in a Government Bond broker.

He said "Richard, nobody cares as much about your money as you do". So I went on my own.

15 years later I am very glad I did as I have never been "scammed".

EM from CO posted over 4 years ago:

If you don't understand it, you should not invest in it. If you do understand it, you are sufficiently wise and intelligent to manage your own money. Never gave my money to anyone to invest, never will. Listen to advice and educate yourself, but keep the keys to the vault in your own pocket. Helps you sleep at night. I cannot tell you the stupid and self-serving advice I have heard from financial planners.

Roger Warner from NV posted over 4 years ago:

I took (paid for) advice from a man who gave himself credentials that strongly inferred he had advised countries on the management of their economies and their banking. He sounded like a guru in every sense of the word. His advice was limited to a select few (his story) and profits were going to be amazing due to his inside knowledge. His name is Neil George. I had a lot of advise but not much of it was good. I now have about $14,000 of bankrupt mortgage company stocks I look at every day in my portfolio. I don't hear from Neil any longer. He has moved on to a new group of naive investors. rgwarn Nevada

Richard Abbott from FL posted over 4 years ago:

I loss some of my retirement money in a Ponzi scheme. I should have heeded Warren Buffet's 2 rules - if it sounds too good to be true it probably is and second if you don't understand it don't buy it!

This outfit was in business for 6 years and the due diligence showed no indictments. Unfortunately this outfit was under investigation for suspicious activity but this type of activity is never recorded in the due diligence process - so there is no way to know about it. I think this type of investigation should be listed in due diligence - who would want to place their money in an outfit that is under investigation for suspicious activity???


Isle of Palms John from SC FL OH posted over 2 years ago:

Don't fall for online tips and teasers selling subscriptions for investment advice. If their advice was so good, they would be investing the way that they advise and probably wouldn't have time to hawk their services. Don't invest in the stock market unless you are going to stick with it for at least 5 years. Then unless you have intimate knowledge of an individual company, diversify. If you know and have confidence in a company, set up a drip account and dollar cost average your investment and allow dividends to reinvest. If you diversify, pay attention to cost but don't forget performance and risk. A cheap fee doesn't mean much if you don't also get good performance after fees and at a low risk. Stay away from companies and instruments too difficult to understand. Remember, just because an investment is doing well now, doesn't mean it will do well in the future. The best time to invest is generally when everyone else wants to sell. But, that's when it is hardest to pull the trigger and buy because fear has taken over. The opposite is true when the market is up and the cab driver,train conductor and even your accountant are giving investment tips. This is usually the worst time to invest. Keep your powder dry. Above all, don't fall for tips. If you can't do your own research, put your money in something safe like T bills or CD's.

Alton Day from NC posted over 2 years ago:

After 50 plus years of investing, I learned a few things....
1. I learned from my old professor Bishop at The University of Tennessee, make my own decisions... I can loose my money myself without help of an advisor.
2. I joined AAII because the early guys encouraged personal research, they were not selling anything. They encouraged reading, studying, thinking !
3. My first stock, AXP, American Express. A capital company at the time....How many know what a capital company is? Others like Sky City Stores , Family Dollar Stores, Nucor Steel, all small riskies.....
4. I have lost some money too. High Flyers some times prove to be too high.
5. I have learned: low PE ratios can be good! A little dividend shows some care for the stockholders! Price to Book value can be a good sign! Think, read, it is your money.

Jeff M from NC posted over 2 years ago:

Thanks Alton..good advise

Michael L Deamer from UT posted about 1 year ago:

In Utah where I live, if some financial advisor or promoter starts talking about his lay position (calling) in church, or missions he has served or says "he is worried more about facing THE LORD in the hereafter if he loses your money", or he quotes scripture, stop right there. Put both hands on your checkbook or wallet and make a run for the door. It's pure fraud.

Gerald Tercho from NH posted about 1 year ago:

Following the comments by RGwarn, Nevada, I too lost over $11000.00 following the "advice" of this self professed "expert" in mortgage bonds. Neil George at the time was an investment advisor for the newsletter, "Personal Finance" and when he started pushing cigars and Omaha steaks and stuff like that, I became suspicious but didn't react in time to dump Thornberg Mortgage, one of his favorite stocks, which at the time payed a 10% dividend. With all of his so-called "expertise", he completely missed or ignored telling investors to sell his recommendations before the credit crisis hit in 2008.
I now heed AAII recommendations and study the journal's educational articles and have been quite successful in avoiding these financial disasters.

tky, New Hampshire

Ethel from TN - Tennessee posted about 1 year ago:

Anyone know about MEC's?

AL from CA posted 8 months ago:

Peter Lynch, former Fidelity fund manager, never invested in technology companies, because he did NOT understand them. Perform due diligence, as a fool and his/her money will soon part. Diversify, diversify and diversify. Invest, but don't gamble. Avoid hot tips. Ultimately, it is your own money, which could be at risk.

Stewart B from FL posted 2 months ago:

After a lifetime of investing, and trying to use different financial advisors, I have come to the conclusion that doing it myself is the best way to go. First, the market doesn't always go up (though, in the long run, the curve of the market is up), and when it goes down, I don't like paying someone to lose my money. I think that's been said before. I do my due diligence. I try to invest in companies that pay dividends. I do take a few chances on high flyers, but watch them very carefully. I am not against taking some. loses because they do happen, but try not to let them get out of hand. My worst bet, (and it is Las Vegas East) was the 2 shares I bought of BRKA at 6, and sold at 18. Today those 2 shares would be worth over a half million dollars. Dividend reinvestment, especially when. your young, is very important. One last thing; Use a Roth IRA. Good Luck.

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