When it comes to investment opportunities, there are a lot of predators out there. There has been a long history of investment scams in the US, and it is important to stay aware. There are a lot of ways to be swindled, and there is a lot of money involved in these scams. This article isn’t to shame you for what you don’t know, but rather to inform you on how to protect your money. We want you to invest responsibly, successfully, and safely. To make sure you have the right tools, we will show you how to identify red flags of investment scams.
If an investment opportunity claims to have a “zero-risk” platform, run. There is no investment that comes without risk, and firms that respect their customers won’t claim they do. Even if they suggest there is “little to no risk,” you are, at the least, being lied to about that. Instead, look into firms offering some standard investment platforms like IRAs, index funds, mutual funds, and municipal bonds. These are tried-and-true, and much easier to learn about and trust.
Run From Guarantees
If a firm or broker tells you they can guarantee you gains, they are lying. There are no guarantees. Sometimes you lose when investing, and that is okay. I don’t care if your friend “knows a guy,” or if you know people who have jumped in, it’s probably a scam. Again, it is at least dishonest. You don’t want to go into business with people who aren’t honest with you.
When you get some email about an exclusive group of high-level investors that wants you to join, think for a second. Do you really think they built a group of successful investors by emailing random people? If they were making all that money, would they really need to recruit? Oftentimes, these groups require some sort of fee to join, and then you run the risk of paying to have your money mismanaged. Best case scenario, you paid for nothing, and you’ll get the same vanilla investing advice you could get here, or on YouTube (both for free).
Avoid Asset Pooling
If someone or some firm is telling you to pool your assets with other investors, don’t do it. Any investments you make should be in your name, handled by a regulated third-party. Your money is your money, and your gains are yours to keep. Don’t risk leaving i in the hands of some aggregate account. This is not how legitimate investments are made.
“Now or Never” Sales Tactics
If you are receiving a phone call or an email that says you need to “act fast” or you’ll lose out on the opportunity, don’t go for it. This is a major red flag that they are trying to get you to pay first, and think later. These predatory tactics are meant to keep you from rationally calculating the investment opportunity, and to keep you from looking up the firm and finding out what their scam is. Never fall for these, and make sure you do thorough research about anybody you are letting handle your investments. Make sure they are regulated, they are well-known, and that you have legal recourse if your funds are mishandled.