Financial innovation brings with it a lot of conveniences. But these conveniences come with their own risks as well as online fraudsters who target internet users.
Fraudsters use increasingly advanced methods to rip people off their hard-earned money.
While credit card fraud has peaked in the past, there has been a significant uptick in investment scams during the Covid-19 pandemic, and many investors have been victims of an investment scam.
Some of these investment scams are designed to look like the real deal. However, there are some red flags you can spot to help you avoid them.
Check out some of the most common tactics these fraudsters use:
How to Spot an Investment Scam
High-Pressure Tactics
Being pressured into making a quick decision is a red flag. Anyone who is forcing you to make a swift investment decision is out to take your money.
High returns at low or no risk
All investments have risk. However, any investment opportunity that guarantees a high return on your investment, but downplays the risk has the tendency to be a scam.
Exclusivity
If you are told that the investment opportunity is not for everyone or asked to keep the investment opportunity to yourself then it’s likely to be a scam.
There are measures to take before making an investment decision and we have outlined a few to guide you.
How to Avoid an Investment Scam
Check for compliance
Scrutinize every broker or financial advisor before making an investment decision. Ensure that they possess the appropriate and relevant operating license.
Do your research
Before making an investment decision, have an understanding of what you want to invest in, confirm how it operates, and the risks. Never make an investment that you don’t understand.
Take the time you need
Take the time you need to make an informed decision. By doing this, you are not pressured into making hasty decisions that you will end up regretting.
Bottom Line
Above all, remember the old saying: If it sounds too good to be true, it probably is.
