: Greed is not good - Latest Ponzi


57
2009-09-16, 03:26 PM
http://ca.news.yahoo.com/s/cbc/090916/canada/canada_britishcolumbia_bc_alleged_ponzi_scheme_victims (Just one recent example)

How can people put all, or most of, their investments into one investment vehicle - and a shaky one at that.

Whenever you see these various Ponzi scheme "victims", there are people, especially older people, who put a huge chunk of their savings into one uninsured investment vehicle. That's just greedy and stupid both.

I don't have much sympathy for these people. I guess they're not much different than the people who expect to get millions from Nigerian e-mails.

As a general rule of thumb, you should take your age, convert that into a percentage number and invest roughly that amount of your retirement investments into secure investments. If you're 70 years old, invest 70% of your retirement investments in secure (bonds, CDIC GICs, etc). If you've got additional investments outside of what you deem retirement investments, then you can be more aggressive, but don't be overly aggressive with your retirement nest egg.

Younger people obviously can be more aggressive with their retirement investments as indicated by the rule of thumb.

Even when you're being aggressive, you shouldn't put all your eggs into one basket (like a single fund). Spread it around a bit, so that if something terrible happens to one of your funds, everything isn't lost.

I thought that this would be "common sense" to most people, but obviously common sense isn't very common any more.

eljay
2009-09-16, 03:31 PM
"It's the lure of easy money, it's got a very strong appeal"

(with apologies to Glenn Frey)

HT gearhead
2009-09-16, 03:37 PM
Stupid is a rather strong word for someone who's been swindled unless it was motivated by greed alone, which isn't always the case. Uneducated, naive or too trusting also comes to mind. Remember, we're talking about professional con artists here who know their profession well and know how to prey on their targets.

ScaryBob
2009-09-16, 03:47 PM
The old rule of thumb applies, 'If it sounds too good to be true, it probably is.' I keep hearing stories about people who timed the market and made large profits. You have to figure that the thousands of investors that follow after the fact will lose almost as much when the bubble bursts. The better half is still whining about the gold fund she bought *after* it went up 40% in six months. Hot stocks, ponzi schemes and pyramid schemes are very similar, big returns for early investors and big losses for late investors.

57
2009-09-16, 03:49 PM
Stupid is a rather strong word for someone who's been swindled unless it was motivated by greed aloneFrom an on-line dictionary, I think the word is quite accurate.

stu·pid ADJECTIVE:

1. Slow to learn or understand; obtuse.
2. Tending to make poor decisions or careless mistakes.
3. Marked by a lack of intelligence or care; foolish or careless: a stupid mistake.

If it was motivated by greed alone, I would have used the word greedy - wait, I did... ;)

Tezster
2009-09-16, 04:20 PM
Well, to be fair, some of these people who aren't well informed may simply rely on others whom they trust to make the decision for them, as is the case for many elderly people i.e. their children or other family members would be investing not only their own money, but also their parents and other colleagues.

Now if that misplaced trust in itself also constitutes to stupidity, I don't know.

'There's enough blame to go around' is a phrase that has been frequently echoed when talking about this financial downturn.

dezzpayne
2009-09-16, 08:41 PM
I think allot of the time they either don't have the information or interest to do it themselves and rely on a 3rd party to handle it all. This is where the trust factor comes in. I recall very recently a guy in Ontario who took his own family for 10's if not 100's of thousands of dollers in such a scheme. If you can't trust blood, who can you trust?

cooper83
2009-09-16, 08:48 PM
57, your choice of words is spot on.

"I would not wish this on my worst enemy unless it's the people who got us into this in the first place," said Raylene Moorthy, an elementary school teacher.
They remortgaged their house to come up with the money to invest.


Hope she doesn't teach math :o