Recognizing and Avoiding Early Signs of Investment Scam

signs of investment scams

*This blog post is both my research and my personal opinion and may contain affiliate/referral links.

The internet is replete with investment scams and if you don’t recognize them at the early stage of your investing, chances are you are setting yourself for failure and disappointment. Recent investment scams come in many forms: stock market fraud, forex scam, crypto scam and many more.

Beginner investors are likely to be scamed if they don’t see the signs early. It’s interesting to know that even the most knowledgeable professional is also not immune to being a victim of fraud investment companies and individuals. There’s really a fine line between knowing an investment is a scam and not acknowledging it.

Investment Scam: Is it real?

The harsh truth is it is very real! Sadly, many had fallen to some kind of investment fraud in their lifetime; and even sadder, many who have not been victimized do not believe a scam can happen to them.

Perhaps one of the biggest scams that you heard of is the Ponzi scheme. Investors are lured into this scheme and are paid with funds from new and recent investors, until nor more funds are left for payments for later investors.

This post is a short and basic primer on how to recognize an investment scam on the get-go and the early signs to look at so you won’t get victimized. The earlier you spot these aberrations, the better you can plant your investment scam exit strategy.

Early signs and early exit strategies to avoid investment scams

Heed the expression: If it is too good to be true, then it probably is. This is the first sign that your gut will tell you if you are looking at an investment that is suspicious. Yes, they have big promise of earnings and profits that are very tempting and that will blow your mind. It’s no surprise that the main theme on investment scams that is often overlooked is easy money with low to no risk.

The question of business legitimacy is also something that needs to be probed. Is the investment registered? Does the sales person or entity selling the investment have a verifiable license? Checking with the local or State business registry or equivalent office would confirm if the business is operating in a legit manner.

As part of your due diligence, it is also critical to ask the hard questions on the representatives of the company and be open minded on their answers. If you are not getting straight answers and are subtly being diverted, there’s a good reason that they are hiding something. As an investor, you are entitled to a company’s prospectus and other documents for transparency.

On instances when a salesperson is pressuring you to buy their product, pay attention to their conduct too; because you are not supposed to be buying out of coercion. Aggressive salespeople sometimes have the tendency to drop you after they have your money. Be very mindful of how you put your trust to salesman or woman who comes out strong in their pursuit to sign you on their investment product.

Knowledge is power when it comes to avoiding fishy investment scams. All the research that you do will pay off as you select the legitimate investments from the fraudulent ones, so take the time to do the additional homework and be patient before you plunge yourself to any investment.

It’s easy to be blinded by enticing sale pitches, as this are literally littered all over the internet. Learn to recognize get-rich-schemes from reputable and quality investment companies. Established investment companies are survivors as financial institutions and have faced and survived adversaties in their many years in the business.

Is it worth your hard-earned money? If it is, don’t throw all your money in a suspicious investment scheme. Many wants to “test” them first, but soon gets hooked on the scam. Invest cautiously and don’t go all in; always diversity your investments to spread your risk.

Scammers will always find a way to be present in the internet but as an informed investor you can be steps ahead in recognizing and avoiding these investment scams. I hope this post has helped you in gaining an insight on this fraudulent side of investing and also in recognizing the warning signs of an investment scam.

Thanks for reading.



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