Fraudulent investment opportunities are everywhere. The internet is chock full of these scams and they’re multiplying rapidly alongside the growth of online investing and trading. This blog will teach you how you can protect yourself, your money, and your savings against these financial threats by providing you with a list of the most common signs of a fraudulent investment opportunity.
It’s too good to be true.
A high-return investment doesn’t exist — at least not for anyone but an investor with deep pockets and plenty of time on their hands. If someone tells you they have access to such an opportunity and want your help getting in on the ground floor, walk away immediately.
The offer comes unsolicited.
If you receive an unsolicited email, phone call, or letter offering you investment opportunities, chances are good that it’s a scam. Reputable companies do not solicit investments from strangers; they go through regulated brokerages and banks instead. If you’re approached by someone who says he has an exclusive opportunity for you but won’t take no for an answer, it’s best to just ignore this kind of correspondence and move on with your life.
The investment is new, secret, or not well understood
Sometimes these investments are legitimate; for example, if you invest in startups, small businesses, or real estate development projects, you may not have access to information about them until after the sale has been made. However, when it comes to investments like these, there will usually be some research available on the company or project before you make an offer. If there isn’t much information available on the company itself — especially if they’re trying to keep their efforts confidential — it’s likely something fishy is going on here.
It involves high-pressure sales tactics.
The salesperson pressures you into making a decision immediately, saying you’ll get an even better deal if you do it now rather than later. The investment comes with high-pressure tactics and aggressive salespeople who are unwilling to answer your questions directly or provide written disclosure information before you buy into the program.
You have to pay to get in on it.
The company will usually tell you that you have to pay money before they can start helping you make money. They might tell you that the fee is refundable if it doesn’t work out or that after paying it you’ll receive a certificate of deposit or some other kind of investment instrument that can be liquidated for cash. Either way, if there’s no reason for them to charge a fee, then there’s no reason for them to take your money either.
You’re guaranteed a big profit with little or no risk involved.
Of course, if an investment is guaranteed, it means there’s no risk involved — and that should send up huge red flags in your mind! If there’s no risk involved, then it should be easy for anyone to make money by investing in this opportunity…but if it were truly easy for anyone to make money with this particular opportunity, then why would the person making the offer be trying so hard to sell it? When it comes to investing, there is always a risk, that’s part of investing. Anyone who says there’s no risk in an investment is being deceptive.
The company isn’t registered with the Securities and Exchange Commission (SEC).
The SEC is the federal agency that regulates the securities industry. If a company wants to offer investment opportunities, it must register with the SEC.
The best way to avoid being duped by a scammer is to know everything there is to know about investment scams. You should learn how they work, what they target, and why someone would create one. Gaining this knowledge will help you recognize a scam when you see one. It may save you thousands of dollars and hours of heartache.
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