Well, well, well, it’s already Wednesday, the middle of the week, the time when everybody starts thinking about the weekend (as if they haven’t been doing so since the last weekend). It’s also a good time to cover one of those unfortunate, but necessary, topics: avoiding scams and the scammers who would like nothing better than to take your money. I’m not going to be able to cover all the types of scams out there, as that number clocks into the millions (and even more sadly, increases all the time), but these few general tips should help you to avoid most of the scams that are out there:
1. Don’t Put All Your Money In One Investment or Firm: If you find a highly successful investment, it’s tempting to put ever increasing amounts of money into said investment. After all, why keep your money where you are earning a paltry return when you could be earning a much higher level of income with one sweet investment? Well, one reason is because that sweet investment might not be all that it’s cracked up to be (ask anyone who invested with Bernie Madoff). By keeping your investment money in a variety of investments at different companies, you can prevent a scam (or even a more common occurrence, like poorer than expected investment returns) from derailing your monetary plans.
2. Know Your Scams: It’s much easier to spot a potential scam if you know what sort of scams are out there. While there are a nearly endless number of scams and schemes that have been tried in the past (and probably an endless number that will be tried in the future), they tend to fall into a limited number of different broad categories. If you learn to recognize the most common types of schemes that are used, like Ponzi Schemes, Pyramid Schemes, and Advanced Fee Scams, you’ll be in a much better position to protect yourself if they are tried on you.
3.Watch Out For Out-Sized Return Claims: It’s a fact of life: we’d all like to make big money with little time or effort. It’s also a fact of life that the opportunities to do so tend to be few in number and limited primarily to people who really don’t need more money (say, the billionaire daughter of a wealthy hotel magnate). If you do receive an email, letter, or even a phone call offering the opportunity to earn thousands of dollars for a few hours of work, or talking about investments that can return 200% of your invested money in days, be skeptical, and assume that they are highly delusional, at best, and scams to get your money at worst. Speaking of unsolicited email and phone calls…
4. Don’t Give Out Personal Information UNLESS You Initiate Contact: Many scammers, online and off, want to get your personal information, in order to get to your money or apply for credit under your name. If you limit the organizations you provide such personal information to those you contact (rather than the ones that contact you), you can minimize the chance that your personal information will be taken and misused. It’s not impossible for illegitimate organizations to get your personal information if you follow this advice (particularly if they sound like a legitimate offer, such as those mentioned above), but you’ll greatly decrease both your risk and the chances that you’ll suffer big losses.
5. Don’t Give Cash To People You Don’t Know: There are lots of opportunities nowadays for you to find yourself wanting to give money to people you never met, from online ‘friends’ to Nigerian Princes with gobs of money they want to get out of the country. Resist this urge: unfortunately, there are far too many people online who will pretend to befriend you or beg you for help, only to take advantage of your generosity. Don’t give in, or you’ll simply encourage them to take advantage of other people (as well as finding yourself out hundreds or even thousands of dollars). Be particularly wary if they want you to wire them the money; this is a favorite method of scam artists due to its untraceable (and unrecoverable) nature.
6. Keep An Eye On Your Finances: It’s possible, in spite of all the advice just given, that you’ll find yourself the victim of some sort of scam. It can happen to the best of us. If you keep watch over your finances, you can catch problems like this (as well as other financial problems, like overspending or investment under-performance) before they cause you too much trouble. It’s not always easy to do, but the money and effort you can save by knowing where your finances stand and whether there are any unexpected problems is well worth it.