How To Spot Investment Scams

Investments are a good way to plan your future. Future proofing the financial security of your family through intelligent investment ventures is a very safe way of keeping you money flow healthy. The only problem is caution has to be on the forefront of your mind when choosing the right investments. Getting duped out of a deal that seemed stable in the beginning would not only mean lost pride but money as well. Losing money to fraudsters is totally avoidable. You just need to be on the lookout for a few things:

Never let yourself be rushed

Be very weary of limited time investment offers. It would be harsh to say that they don’t really exist but you would need to be extra careful when dealing with anyone who says the investment will not be open to you in the future. From a fraudster’s perspective, the rushing is done to prevent you from researching on their organisation thoroughly. While offering high returns, they will push and prod you to jump in the bandwagon as soon as possible. It will be highly risky to get into a business relationship with these people.

Beware of Ponzi schemes

Charles Ponzi was a con artist whose pyramid scheme swindled his investors out of 20 million dollars in the early 1920s. He set up an investment scheme that promised people 50 per cent profit within 45 days. The reality was that Ponzi was using the money from new investors to pay for the older one’s investment returns. This model of fraud became synonymous with Charles Ponzi’s name because of the depth and magnitude of his deception. A more recent example of Ponzi scheme, was by Bernard Madoff who converted his wealth management business into a pyramid scheme and ended up letting his investors lose 18 billion dollars. It will always be good to remember that quick money making schemes will have terrible drawbacks that will lead to losses. There really aren't any shortcuts in money making business.

A deal tailor made for you

Everyone likes to feel special once in awhile. It’s important to reward our inner narcissist occasionally, because self esteem is a very important thing. Except when it comes to investments. Personalised investment plans are a delight from a trusted source that you know has your best interest at heart. But a get rich quick scheme that is offered exclusively to you, and one that has slipped the awareness of the financial world at large? An advice that goes along the lines of “be suspicious” would be a gross understatement if you find yourself in this scenario.

Guaranteed Returns

Your investments are subject to market risks and profits are not guaranteed, and mostly cannot be guaranteed. The pitch that involves the term “guaranteed returns” should be immediately taken with a pinch of salt. Financial wisdom suggests that these are not viable in the market that you have found yourself in. End of the day, capital accumulation is a long term process that sometimes takes a lifetime to achieve. Being aware of this can save you a lot of money that might otherwise be wasted on fraudulent individuals trying to take advantage of you.

Credentials, credentials

Any investment that can’t be verified through the Securities and Exchange Board of India needs to be looked at with scepticism. Firms that are unlicensed to sell securities attempting to do so should ring alarm bells. Be fully aware who you are dealing with and research on their past business activities. Being well versed at the history of the people you are entrusting your money with is just a smart thing to do.

The financial world can be gracious for your business. Or it can throw you into an abyss of fraud and monetary ruin. Being constantly weary of people who seem like they are too eager to watch you prosper in life is really the key. Know that your money is your own and no one else will genuinely want to see you succeed more than you and your family.