invest, thesundaytimes, Sep 29 Lessons from fallen financial idols From Bernie Madoff, mastermind of the biggest Ponzi scheme in history, which cost investors at least US$18 billions in losses when the law finally caught up with him.
Some advice he offered to investors on how to avoid getting scammed boils down to common senses.
Madoff said: "Wall street is not that complicated. If you ask an average hedge fund or investment firm how they make money, they won't tell you. If you don't understand something, then don't invest in it."
And he noted that if an investment sounds too good to be true, it is. He had offered his clients a consistent 11 % to 12% year after year which made no sense, yet nobody questioned him about it and he was able to continue with his scam for along time.
Why did Madoff said: "consistent 11 % to 12% year after year which made no sense."? To understand why?
We just need to look at the benchmark of the world's best investors and their respective CAGR and have some common sense and be realistic on the not-world-class expected average return.
Same for any "Gurus" who claimed to have discovered the Wonderful Magic to make you rich.
Have some common sense; but common sense is not exactly common and that explains why many gullible will always fall into it.
Last updated : 14 Sep 2019
I am 63 yrs old uncle living in HDB heartland who has achieved financial independence @ 56 and finally retired @ 60 from full-time job as employee on 1 Oct 2016.
Single household income since 1995 with three children.
Currently, two sons and one daughter are working.
I have been doing 20 years of long-term investing and short-term trading in Singapore stock market only since Jan 2000 so I am that so-called Panda or Koala in the investment world.
I am currently executing my Three Taps solution model to maintain sustainable retirement income for life till 2038.
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