How to Detect Investment Scams

Beware of Fraudulent Investments!

     Investing is the right choice if you want to manage your money. Investments are made as savings at retirement.

There are two types of investment,

- Investments in direct financial and business products such as shops, offices or property.

- Invest in financial products.

The choice of many people is mutual funds. In investing you have to be vigilant, because nowadays, many people are experiencing fraudulent investments.

Investment scams are investments that will ask you for a certain amount of money to invest in a product or business that doesn't really exist.

The person who told you to do this intends to take away your money. You have to be vigilant and careful when investing, so you don't get bogus investments.

The Characteristics of a Fraudulent Investment

Many people invest their hard earned money hoping to have their money work for them. While there are many legitimate and worthwhile investment opportunities available, investments are also fertile ground for fraudsters.

While investment scams come in many different packages, here are some common signs to help you spot fraudulent investment schemes.

1. Be careful with “now-or-never” or “limited time” offers. It's just a high-pressure strategy to prevent you from getting the real "scoop" on an investment scheme.

People lose millions of dollars every year in get-rich-quick investment schemes, which promise high returns with little or no risk.

This could include rare coins, gemstones, precious metals, art and other 'investment opportunities'.

Scammers create the impression that the number of 'investment opportunities' available is very limited, and if you don't invest quickly, they will be lost.

This is a scare tactic so that it makes you make a decision without looking further into the company or investment rules.

2. Be wary of high return investment offers with virtually no risk. There is no such investment. Anyone who tells you an investment that will pay off quickly must have some basis for that claim.

Be careful when someone tells you that the rewards of investing are sizable compared to the risks.

Be sure to understand what you're investing in – it's quite odd when you can make money but you don't know what you're doing.

Get an independent appraisal of the specific business, asset or venture you are considering.

The valuations offered by those selling the investment opportunity can be bogus. Speak to the previous owner of the asset or business you are acquiring for its history of value. Discuss any investment plans with an accountant or financial adviser you know and trust.

3. Be skeptical of testimonials – you are better off reading the written prospectus and checking the company with a local, authorized securities commission.

Be careful if the company selling the assets, shares or partnership units has not registered the securities. Companies must register their securities file prospectus and annual report with the securities regulator.

4. It can stop at any time

Investment scammers will usually say that you can stop investing at any time and take profits when you stop.

You will be promised the convenience that will really spoil you as an investor. Of course, this is not true, because the investment process certainly has a certain time period.

If there is a company that offers this, you can be sure that this is a fraudulent investment.

You Think You've Been Scammed! What should you do?

Report it to Authorities

If you feel that you are the victim of a scam, be sure to report it.

Agencies who may be able to help depend on the nature of your complaint, including the Federal Trade Commission (FTC) complaints website, your local FBI office, your state attorney general, and your state securities regulator.

You can find contact information for the latter group on the North American Association of Securities Administrators (NASAA) website. You may also want to consult a private attorney, especially if the loss is very large. (investopedia.com)

Summary

When you want to invest, you should consult with people who understand about investment. Make sure in advance whether the investment service provider business entity is legal, both in terms of licensing, whether its membership has been registered and supervised by the local investment regulator. So you can avoid fraudulent investments. Don't easily believe investment advertisements on the internet, look for information first, ask for and study the investment schemes offered to you.

Usually investment scams are not transparent in providing detailed investment schemes.