AND NOW THE SCAMS APPEAR

One good thing this credit crisis has done is flush out many of the scams as investors try to move funds out of these schemes only to be told that really there is no money there at all. Often investors are long term and have received excellent returns for many years, all funded by new investors who also want higher than normal returns. Whilst they will be horrified about their money, at least by finding out the truth earlier the damage will be limited. With the Madoff "Ponzi style scheme" in New York to cost investors in excess of $50 Billion, and many other scams and frauds in the UK, Australia and elsewhere, the overall figure will be much higher that people realise.
What can we learn from this experience? How many times have you heard the saying "If it sounds too good to be true, then it is too good to be true" There is no way that you can earn more than other investors without taking a higher risk, or worse still investing in something that later turns out to be illegal or a scam.

Scammers rely on one ingredient, and that is the greed of the investor will override his or her common sense. That coupled with some charm and an air of "trust me" and your hooked. Always remember that the return of your money is more important than the return on your money.

Sure everyone knows that these confidence fraudsters are bad people who should be jailed for their sins, but if I can just say something controversial here and suggest that most of those people who got hooked are victims of their own greed and stupidity, and in all probability they would have lost that money anyway because they were governed by the worst of all human investment traits, and that is greed. It is a characteristic that we all have, but we need to suppress it if we want to survive in a tough world. Greed pushes us to take risks which eventually start to resemble gambling more than rational investment strategies. If stupid greedy investors did not exist then nor would scammers profit from them.

Sit down now and look at your investments, savings, superannuation, properties owned, and any other form of investment that you may be involved in. Ask yourself why have I invested money in this, what are the risks, and what are the benefits. What would happen to me if this investment failed and I lost it all. Examine everything and if necessary make gradual changes to your investment strategy.

I hope this advice hasn't come too late.