Investment company = rip off?

Question

I've seen on local newspapers plenty of times about people getting scammed by the so called investment company when the owner of the company disappears with the investors' money. Are there any legitimate investment companies? How can you tell if an investor company is legitimate? If a company is legit, how do they invest? In stocks? I can do that myself. Why would I hire them then?

Answer 1

Look for well known, established companies. While nothing is guaranteed - its helpful - i use Charles Schwab, but there is etrade and scottrade as well, fidelity investments...etc..

Answer 2

your question is difficult....Where-ever there is a lot of money, there are people trying to take advantage.

First...Try to look objectively at an investment...does it promise an unusually high rate of return..RED flags and warning bells should go off in your head.

Any investment that dwells on the tax savings component of an investment..should be avoided..Investments should make sense on there own, not because of tax benefits.

Any investment involving a limited partnership should be avoided, they usually are illiquid (can't sell) and only the general partner makes the money (movie partnerships are commonly sold)

Any investment in companies, soon to be listed on the stock market, should be avoided, as if the company was good, the little guy wouldn't get a chance to buy it. You do get a chance to buy in to companies the smart guys won't touch.

There are more things to consider but here is a few.