Posts Tagged ‘money manager’

How to Avoid Ponzi Schemes

Posted February 2, 2009 by Bernz

The recent arrest of celebrity financier Bernard Madoff brought to light an old investment scam, one that is enjoying a recent resurgence as investors try desperately to hold on to their returns.

The ponzi scheme is named after 1920’s investment manager Charles Ponzi. Ponzi had promised his investors that they would double their money in 90 days- a feat which was not being accomplished anywhere else at the time. Dubious investors were won over by testimonials by happy clients and were soon bringing in amazing returns on their own investments. What Ponzi didn’t tell anyone was that it was impossible to make that kind of return on investment. What he had to do to keep up appearances was to pay the astronomical returns out of new investment contributions. Ponzi’s scheming would have eventually collapsed when the new money couldn’t keep up with the promised returns but instead Ponzi called himself out. He was irritated that a firm down the street had started a similar program and he called the police. Ponzi spent several years in jail before being deported back to Italy. He died penniless two decades later.

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7 Things you need to know before you invest in a Mutual Fund

Posted October 12, 2008 by Bernz

1) Know what you will use the money for. List your goals and determine if they are short or long-term. By doing this you have an easier time making other investment decisions.

checklist12) Determine your risk level. Think about whether you’ll lose sleep over worrying about the possibility of loosing your principal or the uncertainty of a fluctuating market.

3) Consider whether or not you can do without the money you’ll be putting in your investment and how long you are willing to leave it untouched. This of course depends on your goals. Plus, the longer you have a mutual fund the more you’ll incur fees and other costs.

4) Account for sales charges and fees. The costs of having your mutual fund professionally managed eats into your profits. Avoid mutual funds that charge front-end or load fees. These are expenses deducted from your initial investment that will have an impact on your returns.

5) Choose a particular fund style. Mutual funds are categorized into three: growth, value, and blend. Growth stocks are shares in companies which are generating profit at a face rate. Value stocks are shares in companies who may be experiencing rough financial times, and they’re bought at a cheaper price for that reason. Blended funds are a combination of growth and value stocks.

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