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CHAPTER 12: Dealing with Professionals > How to Reduce the Chances of Being Sca...

How to Reduce the Chances of Being Scammed

Here are the steps you can take to reduce the chances of being scammed.

Transparency

First of all, don't buy any investments that lack transparency. If what the advisor is doing is opaque, keep him and your money separate.

Surprisingly, it's fairly easy to tell whether your investments are legitimate. First, are you receiving regular statements from the custodian? It can be a bank, brokerage firm, insurance or mutual fund company. In Madoff's case, many of his clients received “statements” that were printed by one of his colleagues.

Next, look at the investments on the statement. In general, they should be publicly traded securities—stocks, bonds, mutual funds, ETFs. Legitimate firms generally put a ticker symbol next to the investment, which makes it easy for the investor to go online and check the current market value at any time.


  

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