Guiding consumers since 2009

Don't get ripped off

By Staff Writer

A scandal is brewing in the financial sector. Accusations have been made that a South African now resident in Australia has been running a Ponzi style rip off. Basically massive returns were promised for investing in the scheme but the money that new investors paid in was actually used to pay out prior investors. No real value was being created and it was allegedly a case of robbing Peter to pay Paul. In times like these it is easy to feel that with all the financial pressure on you just have to do something, and if someone comes along offering the end to all you problems you might just fall for it. So how do you not get ripped off?

 

  • If it sounds too good to be true it probably is
  • 'Secret' methods are nonsense
  • Due diligence is key

 

Barry Tannenbaum is accused of running a Ponzi style scheme whereby he would pay older investors with new investors' money. This kinda crime is named after Charles Ponzi who wasn't the first to use this sort of scheme but is the one who lent his name to it. The promised returns can cause even experienced business folk to invest money in dodgy schemes. This is the power of greed and anyone can fall prey to it. It should be noted that Tannenbaum has denied all charges and is sitting happily in Australia awaiting the legal outcome. In a climate of fear a little bit of its corollary greed can get its hooks in and cause you to act irresponsibly with your money and get all Ponzi on it.

Knowing exactly what you have in your budget will enable you to work out what you can afford after all your deductions. Money that is left over can be used to grow your money or for investment. However you should look at how much risk you feel comfortable with and the higher the promised returns in general the higher the risk of the scheme. Money making is a slow process if real value is being created, unreal expectations are often driven by extremely risky investment schemes, just look at the global financial crisis where dodgy mortgage investment schemes caused a lot of the crash. In the end if it sounds too good to be true, it more than likely is too good to be true. So don't waste your money on get rich quick schemes but rather do a budget and ask a financial advisor if you have any specific queries about your investments.

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