1) Find “high-return, no-risk” opportunities and give them your money
2) Do business with someone who tells you to “trust me”
3) Do business with someone who discourages you from talking to other people (“this is a confidential matter, don’t tell anyone about it”, “don’t let your friends and family be dream-stealers!”, “don’t talk to a lawyer/banker/accountant, they’ll suck the blood out of you and stop the deal because they’re overly conservative”)
4) Do business with someone who wants to teach you how to make lots of money (by doing a deal with them where you put up your money and they dictate how every element of the deal will work in order to “teach” you)
5) Blindly follow a “secret path to wealth”. Get angry at anyone who questions the path or points out flaws.
6) Pay gurus for “secret” information
7) Pay guru-students for second-hand “secret” information
8 ) Invest in “business opportunities” discovered on lamp posts, in the classifieds, on USENET or in your e-mail inbox.
9) Ignore anything that’s “too complicated” and only pursue simple strategies
10) Believe that its easy to “work smart instead of hard” (and that someone can show you how to “work smart” in a short period of time)
Any other ideas?
{ 6 comments… read them below or add one }
I have to say that I don’t think #9 is the worst thing to do. If you don’t understand a strategy then maybe it’s worth avoiding.
I’d say buying an investment for tax reasons only (LSIFs) are a good way to get scammed.
Mike
Mike: I agree with you, I guess what I’m referring to here is people who are unwilling to even understand basic financial vehicles (e.g. how RRSP contributions work or what Index Funds are) and just turn their cash over to a mutual fund salesmen (“give me your money and I’ll make sure you get a good return – it can’t get any simpler than that!”).
I probably could have expressed the idea better…
I see what you mean – I was thinking more in terms of strategies like smith man., leveraged investments etc.
If someone doesn’t have an rrsp because they don’t understand them…they might be better off with a MF salesman!
Mike
Even the Smith maneuver, at its core (ignoring the silly segregated funds and whatnot) its the idea that borrowing for investment purposes is tax-advantaged, whereas borrowing for your principle residence is not (here in Canada) and you should therefore pay down your mortgage and borrow to invest -> it isn’t the most convoluted idea in the world.
If someone is unwilling to understand that they’ve got some hard times ahead of them…
I guess its not really a scam if they choose to stay ignorant though
.
How about:
9) Don’t bother understanding anything that’s “too complicated” and blindly purchase investment vehicles
(or is that the same idea as 4 & 5? Maybe I should just strike out 9 altogether…)
I think #9 is definitely a keeper – it’s probably the most common problem on the list.
I think it should be something like:
9) Don’t bother trying to learn any basic investment knowledge – just blindly purchase investment vehicles.
It’s not perfect and it may not be what you were originally going for. But it’s true!
Mike
That’s exactly what I was going for! Thanks