Caller On Podcast Asks About High Yield Account That Will Be Returned At Maturity, Suze Orman Says 'Sounds Like A Ponzi Scheme'

Suze Orman, renowned for her financial advice and "Women & Money" podcast, recently answered a question about a high-yield account that sounded too good to be true. The caller asked, "Is there an investment opportunity for high-yield notes for a minimum of $10,000 for this investment? I believe they would pay 15 percent interest per annum, sending a check monthly. My complete investment will be returned at maturity. So, is that possible?"

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Orman's cautionary response was direct, drawing from her early career experiences. “Listen, here’s what all of you need to understand. I’m gonna tell you just a little Suze story,” she began. She recounted an incident from her early days when she advised two clients on similar high-yield investment opportunities. At the time, she advised her clients to invest in a scheme that promised higher-than-average interest rates. Unfortunately, the company they used to invest in went bankrupt and became an illegitimate entity. The clients lost all the money they invested. 

“I felt so bad about that because I hadn’t done my homework. I went for a higher yield than what everybody was getting at the time, thinking I was just so smart,” she confessed. She learned a hard lesson about the importance of due diligence and the risks of chasing high returns without it. And even though both of her clients had passed away by the time she had the money, Orman was determined to pay them back and reimbursed each of their estates everything that they had lost. 

Reflecting on this experience, Orman addressed the caller’s question with a stern warning: “The answer to this question … you’re asking, is this too good to be true? Even the fact that you are asking that question, it is. You say that they’re gonna pay you back 15% a year, but they’re going to pay you back monthly. Sounds like a Ponzi scheme to me.” 

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Orman emphasized the importance of ensuring investments are legitimate and secure. She advised listeners to only invest in registered companies listed on the stock exchange and recognized as legitimate. “I wouldn’t touch it with a 10-foot pole. Don’t learn the lesson that my two clients happened to learn,” she warned.

This story touches on an important piece of investment wisdom: if an opportunity seems too good to be true, it probably is. High returns come with high risks; without proper due diligence and understanding, investors can easily fall prey to fraudulent schemes. 

Orman's advice underscores the necessity of caution and thorough research when evaluating investment opportunities. She reminds her audience that no legitimate investment can offer high returns without corresponding risks. Therefore, seeking the guidance of a financial advisor can be invaluable in ensuring your financial strategies align with your long-term goals, providing peace of mind and financial security.

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