Avoid The Scams – They grow during a downturn in the economy

by Peter Rizzo

Life Settlements in a Retirement Account? Think Again.

I think everybody will agree that in today’s world, everybody’s view of the economy and all the issues going on are making people unsettled. When this happens, there seems to be a search for a better security for investments, higher returns for investments and a myriad of investment opportunities every time you open an email.

The opportunities come in all shapes and sizes, from raising pygmy pigs to Manhattan townhouses all promising better-than-market returns and the safety of your dollar. As much as we try, it is easy to fall prey to someone who is just trying to pad their own pockets rather than increase your net worth.

Granted, some investments just go bad. You must remember that the higher the reward, the higher the risk. Not everything works out as planned, but then there are some that are just downright crooked with the only intent being to get your money.

Here are a few tips I got from an attorney who specializes in fraud and recovering funds for those that are scammed:

  1. If you are investing in real estate, be sure you are on the title, or if in a partnership, that you have signature control and can take ownership if the need to be arises.
  2. REITs are popular real estate investments, for with a nominal sum of money you can invest in large projects. If you take this road, ask for a list of properties that the investments will cover and check them out. If they don’t have a list, you’re probably using your money to try and acquire more properties. That is OK as long as you keep track of the acquisition process, for you don’t want your money sitting there and invested.
  3. Notes are becoming very popular, but they also can be very deceiving. If you’re investing in a note, know who is responsible for payment. That can only be unveiled by completely reading the note. Many times, people think they are investing with a company who has large resources, but the guarantor of the note is an individual or a small firm that you don’t know. If the note seasoned, meaning payments have ben made, ask for a deposit record. Sometimes that’s not available, but it doesn’t hurt to ask. And then, if it’s not available, factor that into your decision to purchase. Many notes are now saying restructured with the seller of the note saying it was the same as a Refinance. In that situation, find out if that was really true and not that a sheriff sale was warded off by restructuring the note for more money or longer-term. There’s nothing wrong with notes from an exchange as long as you check out the borrower and they meet your qualifications.
  4. This type of investment used to be a couple friends or relatives getting together and investing in a business, real estate or other venture. Lately, it’s been very popular for flippers to bring in partners instead of banks and let people taste the profits (hopefully) that many professional flippers enjoy, without all the work . Right away, you should have your guard up. You must know all the expenses that will be counted against the sale before profits are split. It could be anything from administration costs, realtor fees to what-have-you. There are many people that walk away from the sale of the house with a smaller profit than anticipated because of the cost of expenses they did not count on or were not disclosed at the beginning.
  5. Metals—whether it be gold or silver (the most popular precious metals), a downturn in the economy or ramping up of inflation brings up the demand for precious metals, which in turn brings out a number of scams or the oversale of inventory. The best advice given is to never, never, never buy these unless you can see or touch them and if held by a custodian be able to view that your metals actually exist. It’s very easy to find exchanges and dealers that will sell you the actual gold or silver coins or other forms that it is incumbent to not take the easy way out and just buy a certificate of ownership that you can’t see the asset. Lastly, remember anything valued over spot price you will be subject to someone else paying a premium for a collector coin and the value is not as clear.
  6. This is saved for last, for the Crypto world is like the wild west. Everybody wants to get in on the latest thing and sometimes lay caution to the wind. The best advice from experts is control the keys so you and you alone can assure their existence and deal with reputable exchanges. This seems very simple but every day, there seems to be a different coin mined or developed from having dogs on them to lollipops. Make sure their existence and you have done your due diligence.

These are some basic rules to live by so you don’t fall prey to those out there that are only looking to part you from your hard-earned money and not help build your wealth. There are many solid investments, advisors and opportunities so dig deep and you will find them.

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