How To Avoid Losing Your Money, Part 1

I recently met with a client that asked me to explain how bright people get sucked into Ponzi schemes and other high risk investments. My answers were very simple and straightforward:

1. Humans are motivated by two primary emotions: Greed and fear.


2. Greed is what leads to being swindled and/or losing money with an investment that had much more risk, but the only "song you wanted to hear" was how great it was going to be.


3. Investors seldom read the fine print.


4. Investors seldom request personal financial information from someone selling them an investment. Doing so would be very revealing, usually in a bad way.

In the last week, I also had the opportunity to write the narrative for a new Comprehensive Wealth Management client, who desires to find out what their retirement picture looks like. Below are some of the "hits" from their financial plan:

Avoid getting sucked in by any investments or people selling investments that seem to offer projected annual rates of return that exceed that of what WFG is projecting as safe, reliable returns.

• Rule # 1, there is no such thing as a free lunch (IPM Realty, Madoff, Markman).


• Rule # 2, there is no such thing as a free lunch (Oxford, Trevor Cook, Tom Petters).


• Rule # 3, there is no such thing as a free lunch when it comes to annuity products. They promise the moon but deliver the lack of oxygen found on the moon.

We will take the first sentence back; there is such a thing as a free lunch (or dinner) as this is the number one marketing method for staging the annuity “pitch."

Jerry Wade sold annuities while at IDS/AEFA for 10 years.

He has not sold them the past 16 years. There is a reason!