Friday, July 03, 2009

Who Can You Trust With Your Money?

Even during good times it is hard to trust another person or company with your hard earned money. What if you get taken?

This past year has only added to the fear with crooks like Madoff, Stanford and numerous other con men and women literally stealing the life savings of innocent people, charities and pension funds.

Yes, you can stuff your cash in a mattress or personal safe to physically guard it, but let’s face it, there’s got to be a better way. It’s a bit like identity theft. There are standard and common sense precautions to take that work 99% of the time and there is always that 1% that is unavoidable and unpredictable but necessary for us to prosper.

I’ve put together some basic rules that it makes sense to follow.

*Know what it is you own. Whether it is a CD, a stock, an annuity, real property, a mutual fund, etc. you should have a document of purchase and it should be traceable.

* Beware of writing a check to an individual who is investing your money. This is how many crooks take advantage. They cash the check because it is made out to them personally and never invest it where they said they would.

* Don’t invest in something you don’t understand.

* Most investments should be in vehicles that are regulated by the state and or federal government. Stocks, mutual funds, annuities, real estate are all examples.Be cautious of giving money to a person or company that tells you they will give you unusually high returns on an investment you can’t track the value of or that is unsecured by some sort of collateral.

* Be aware if your investment is in anything except some insurance products, annuities and CDs with guarantees you can and often will lose value as well as receive gains.

The moral of this story is not to be afraid, but to be cautiously optimistic and educated on where you put your hard earned gains and savings. If we learn nothing else from this rotten economy, it should be that prudence should outweigh greed.

Paula Straub