Yahoo! Finance had an article provided by CNBC that listed the top 10 Investor scams. They are as follows:
- Ponzi schemes
- Gold bullion and currency scams
- Natural resource investments
- Life settlements
- Private placement offerings
- Real estate investment schemes
- Entertainment investments
- Short-term commercial promissory investment notes
- Speculative inventions and new promises
- Leveraged Exchange-Traded Funds (ETFs).
Dodging the Reserve Money Market Fund
I would like to add one that I dodged for my mother. She was "recommended" to move her dormant cash from a regular Money Market fund that was earning about 2.5 percent to a "Reserve" Money Market Fund that was earning about 4.5 percent. When I reviewed the prospectus to find out what they were investing in, the red flag to me was that it was a "leveraged" Money Market fund. They listed that they would borrow up to 25 percent for additional investments. The purpose of a Money Market fund is stability and you do not get that with leverage.
In 2008, it caught up with them and the "sacred" dollar value was broken.
Advertisements on KNX1070
Obviously no one is going to advertise that they are selling a Ponzi scheme, but I frequently hear advertisements for Gold bullion and Life settlements.
List of related websites:
- Click here for the full article on Yahoo! Finance and details on each trap.
- Click here to be taken to the Reserve Funds website.
- Click here to read a USA Today article about the Reserve Fund falling below the dollar value.
- Click here to go to KNX1070.
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