How can you sniff out an investment scam before it is too late?
For anyone who works in finance or has financial matters (which includes about all of us!), if you haven’t felt the emergence of investment scams yet – then you probably will soon. Investment scams are in a couple of words – bad news. The sorry tale is, that most of you will not understand in full, what an investment scam is and how it can effect you. All that we know, is that ‘scam’ is just another term for fraudulent activities. So to make sense of the topic and make you think twice before jumping in the deep end, this article will explain the traits of investment scams – so you can be more aware and in turn, more secure.
Here are some of the most common signs associated with investment scams:
The Temptation of Investing Overseas
We call this international lure and for some people, investing in something overseas can be an attractive idea. The chances of getting your dollars back though – are next to nil. Many complications arise as different countries follow different rules and regulations. Investment fraudsters will take this opportunity to make out that the money can’t be returned due to these laws. Your best bet is just to stay clear from international lure all together.
They Are Not Registered With the Authorities
Any business who wishes to offer investment schemes, must register with the regulating authorities of the state. Furthermore, the seller of the investment scheme must be registered as being an investment adviser. If they can’t show valid proof of this registration, then turn away.
Limited Documentation
I’m talking about having prospectuses with the full details of an investment scheme and detailed contracts. Before handing your money over, always demand full disclosure.
Suspicious Return Rates
If you get the slightest suspicion that a return rate is too high then stop in your tracks. If the return rate is greater than what you could usually gain from that asset – then there is a good chance that scamming is coming into play. You are not expected to know everything about investing, so if you are unsure when making a decision – always seek out a trusted financial adviser first.
Hiding Under The Cover
Do they have something to hide you ask? Are they doing their best to stay clear from your financial adviser or shake in their boots when you mention the word ‘attorney’? If they are being secretive then it is one of the big tell-tale signs that they are a fraud. They will probably rope you in on the secrecy too – claiming that the deal is confidential and that you can trust them for being professionals. Don’t fall for it – if they are legit then they won’t be fearful from your financial advisers.
No Records
An investment company should have some returns that can be checked by a third-party, such as a law firm. They need to provide you with documents and records that outline how their investment plans have succeeded in the past, should you ask to see them. Do ask and be one step in front.
As a final word, don’t be caught up in the prospects of making a lot of money for nothing. It is those people who run before they can walk, that can be the biggest victims of investment scams. Do your research, follow the advice in this article and employ a credible financial adviser if you haven’t already.
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Tags: business, financial, investing, investment scams, stock
