How to Prevent a Bernie Madoff from Destroying Your Nest Egg

Bernie Madoff, the man responsible for the largest Ponzi scheme in history, has been sentenced to 150 years of prison. Madoff, 71, will most likely never leave prison, which may or may not be enough of justice for Madoff's victims.

For decades, since 1980s, Madoff ran a Ponzi scheme that robbed people of lifetime worth of savings and victim losses exceed $13 billion. Investigators are not done tallying up Madoff's Ponzi scheme damage, with investment losses potentially in astounding figures. Many victims invested with Madoff for decades, and lost retirements or were reduced to poverty. Bernard Madoff's Ponzi scheme has scared many away from investing, and alerted people to be watchful over their current financial investments.

Given the severity of Madoff's crimes, investors are concerned about lack of trust in financial industries and investment firms. A lesson to be learned from Madoff's Ponzi scheme is to protect yourself by never counting on an investment firm to have your best financial interests in mind.

Many of Madoff victims invested only with him, for decades and placed all of their life's savings into Madoff's reportedly trustworthy investment firm. This bad move reminds investors to distribute their monies into different investments, stocks, mutual funds and bonds. In simple terms, never keep your eggs in one basket.

Madoff victims also received monthly statements, showing their investments rising every single month and earning even when the market was crashing. The information on statements was reportedly false, and completely fabricated. An important lesson from this is to always check your investment statements, and compare them to real numbers available on stock exchange websites. The internet is your friend in terms of research, websites such as http://moneycentral.msn.com are free and offer real time market updates. Compare real time market updates to the information provided in your statements.

Invest with local banks for mutual funds, and diversify. Local banks offer free financial planning, and many offer internet access for keeping track of mutual funds and investments. The online access should always be real time, showing percentages invested and how the individual company is doing.

Bernie Madoff's victims also invested large sums of money, often every penny saved. Keep enough cash in a savings account that will allow you to pay bills and live in case the worst happens.

Every product sold by a bank is not automatically insured by the U.S. government. Bernie Madoff's victims invested with a company that was not insured. Ask questions of your investing firm or bank about security and insurance offered, and the amounts covered.

Sources:
Madoff sentenced to 150 years
Federal judge gives maximum sentence to Ponzi mastermind following his apology and victims' request for life sentence.