Ways to Avoid Investment Fraud and Scams

You just receive a salary bonus and now you’re thinking where on earth could you best earmark this windfall money. The most apparent thing that enters your mind is to have it invested. And while searching for the soundest investment platform, you have stumbled to a very promising and interesting ad, “Turn your $10 into $20,000 in just 3 weeks. This investment has guaranteed high returns – no risk!”

Avoid Investment Fraud and ScamsEvery type of investment out there has their own ratio of risks and rewards. Countless investment platforms are available for you to choose from. And along with these, fake and fraudulent investment schemes also exist. Fraud and scams can plague your income and savings. The most common among them is the Ponzi Scheme. As described in the scenario above, this kind of scam generates returns of old investments through the investments of new people. Advertisements like ‘turn your $10 into $100 in two weeks’ plus a promise of high amount returns without much effort – that’s how many people get trapped in this bedlam. The operators let the investors believe that the cycle can sustain itself but the truth is, no services are rendered, no products are sold, no investments have been made, thus, it is impossible to generate any wealth or money in the process. The fact is, even if they will be able to recruit all the people in the world, most will still tend to lose money down the line.

Remember, you are investing your money. Money that you can use elsewhere for your family’s needs. So before signing in a certain investment scheme, be sure to be very vigilant.

To help you stay away from these kinds of scams, our friends at CrimeLawyer.co.nz has come up with a shortlist of things to do before you reach out for your wallet and invest.

  1. Do a Background Research

Before trusting a company or a person with your money, they wise first thing to do is to conduct a background check. How and where to start? You can seek an expert’s advice and get a second opinion. Just make sure you will ask someone who is really knowledgeable like a qualified advisor, a lawyer, or an accountant. The second one to check, is the registration. Is the company properly registered to the government? Most specifically with a security regulator? And lastly, you should research the investment itself. Get a feel on how it works so you can understand its possible risks and rewards.

Be sure to spot red flags like if the investment is too good to be true because if it is, it might be just deceiving to the extent you’ll have an eargasm from the promises they said they can fulfill. If they say you will earn passively, while there are some real investments that you can earn without doing much, you should still think twice and look deeper and understand how your money can generate income. Don’t get too attached to the presenter’s sweet talks and promising returns.

  1. Don’t Let Them Set The Phase

Most fraudulent salesman will rush the transaction so you will not be able to think better. Some even use a limited time promo so you will feel that you have to put money on it as soon as possible. Additionally, they understand that most people are suffering from financial anxiety and they prey those in fears. This may scare you and move you to invest your hard earned money.

Since you are the investor, you should take the command of the transaction because it is your money. Do that by asking tough questions and by making the final decision of whether to push through investing or not.

  1. Be Alert All the Times

Don’t be shy to ask questions. Remember, it is your money so it is your right to know every details of where every piece of it will go. When he is tackling the returns, stay attentive and make sure every details is precise and clear.

Also, staying updated with recent news about scams or anything related to your investment will give you an idea of how they work and what kinds of schemes you should avoid.

  1. Constant Vigilance is the Key

Even after you have invested your money, you should continuously stay alert. Ask reports from time to time. If he is a legit investment broker, he can explain the progress of your investment very well. If something smells fishy, it might be time to consider pulling out your money and putting it elsewhere.

To cap everything up, being inquisitive and cautious is the key. Even if the offer looks good on the front, scrutinize every detail so you will be sure on where your money will go, and how will it grow. Furthermore, there are safe investments out there that you can use like VUL insurance, UITF, mutual funds, stock market trading, and many more.

If you opt to invest, just be mindful that these kinds of investments are for your long term goals. Do not put all your liquid assets to these investments and leave yourself with zero emergency funds. Determine what situation might probably arise that will make you need money quickly. You should also define your investing profile and so you can understand what type of investment is the best for you. Make sure to diversify your finances as there are no such thing as guaranteed returns, even from these kinds of ‘safe’ investments.