Centuries ago, investment decisions were easy. You earned money at your trade, kept your gold coins in a pouch attached to your clothing and knew exactly how much wealth you had. You worried more about survival than the economics of gold values and if you were robbed, you knew immediately.

Today, wealth is less tangible. If your electrical contracting business has been profitable, you want to increase the value of your returns both by plowing profits back into future operations and by diversifying investments in other businesses.

It is hard to tell the legitimate proposals from the swindles, especially when some are actually failed ideas, turning desperate business people into con artists. Be sure to research the seller, analyze the plan and track progress of your investments, or you could be another victim of the latest con.

Swindlers target people who think “it could never happen to me.” Some deliberately seek those who have little wealth or are desperately seeking a way out of financial trouble. They might offer to teach you how to use their successful strategies to build wealth-for a price. The victims all have something in common-their greed is greater than their caution.

The most successful swindlers are great salespeople and use the same techniques as legitimate professionals do. They telephone you from high-volume “boiler rooms.” They buy real mailing lists using indirect offers, enticing you to contact them, thus avoiding postal regulations. They advertise, dangling the bait of high profits, then “set the hook” once you have bitten, hoping to hit and run before regulators notice them.

Some con artists look like reputable professionals with first-class offices and full calendars, often donating to charity, joining civic or business associations and appearing to be solid citizens.

While legitimate salespeople promise what they intend to deliver, the swindler never intends to honor promises and will tell you anything. Often, the bait is a return high enough to be attractive, but not enough to make you skeptical.

Low risk is another key factor. The swindler might become impatient or even angry if you ask about risk. Timing is critical. A sense of urgency is part of any successful pitch. Only a “limited number” of people are allowed to invest. The window of opportunity closes fast, giving you little time to think or investigate.

Here are some types of schemes:

°The Ponzi scheme: A small number of influential people are enticed to invest in, for example, arbitrage involving foreign currency fluctuations. New investors provide the funds to pay handsome returns to the original group. Word spreads and new victims line up. When the money pours in, the swindler leaves town with most of it.

°The Sure Thing: The “forecaster” calls 100 people and predicts that a commodity price will rise or fall. The second call is to the 50 people who received the correct prediction, and the cycle is repeated with a new commodity. Both times, the swindler refuses investments. The third call to the 25 who received a second correct prediction finds victims eager to avoid more missed opportunities.

°Solid Investments: The swindler only wants a small down payment to be used for financing of a large purchase of, for example, silver. Future price increases will reap big profits, and investors can even see “their” silver bars in the vault, behind a large window. The silver is really painted plastic, and the highly leveraged profits evaporate with their “down payments.”

Asking questions is the best defense for a potential investor faced with an enticing proposal. Keep saying “no” until you -receive satisfactory answers to these basic questions:

1.How did you get my name?

2.How long has your company been in business, what is your track record and can you provide references?

3.Are investments kept in segregated funds, and how will progress be reported?

4.What types of commissions and management fees are included?

5.Is there a prospectus, and will you explain or provide it to my investment adviser/attorney/accountant?

6.Is the investment traded on a regulated exchange, and what agency or industry group has oversight?

7.Who are the principals, and how much of their own money have they invested?

8.What are the risks, and how do I liquidate my investment when I decide to?

9.How are potential disputes resolved?

Asking questions marks you as a vigilant investor and removes control of the conversation from the swindler (who is asking questions designed to elicit “yes” responses from you). The most skilled cons are structured to operate within cracks in the regulatory system, and enforcement is limited by capacity and funding.

It is true that higher returns accompany riskier investments. Vigilance requires time and work. Maybe you will discover the exception that proves the rule and retire early. Or maybe you should put your money in a pouch and keep it with you at all times. It is your choice. EC

NORBERG-JOHNSON is a former subcontractor and past president of two national construction associations. She may be reached at bigpeng@sbcglobal.net.