Top Tips To Avoid Investment Scams
Getting into the world of investing is an exciting time where you can potentially make a lot of money and secure your financial future. However, before you dive in and start investing your hard-earned money, it is extremely important that you know not only exactly what it is that you are looking for in an investment, but also what you should definitely avoid. Unfortunately, there are plenty of investment scams out there and no one wants to lose their money to this. Below, you can check out our top tips to make sure you avoid these.
Is It Too Good To Be True?
One of the easiest mistakes many new investors make is putting their money into something that really is too good to be true. Markets are volatile, and any promises of smooth investment returns should flag up to you as a warning. If excessive returns are also being posted that are far higher than the benchmark, this will also most likely be forex scams as this type of trading needs a lot of time, patience and education to ensure that it is profitable and massive percentage gains each month just are not reality!
Do Background Checks
To ensure that you are not being scammed, it is important that you conduct appropriate background checks. This is normal when entering into any business relationship and so do not make the mistake of simply going by the word of friends or colleagues recommending an investment. Do you own safeguards to protect your cash.
Are They Their Own Broker-Dealer?
If you are going to invest with someone who is their own broker-dealer, then you need to be extra careful of making these investments as it is easier for them to falsify trade information and statements that are sent out to you and other clients. When you use a financial firm on the outside as your custodian this can help to prevent this from happening. This custodian will be responsible for the important back office functions which includes any investments being made or trades being settled. It also deals with mailing clients like yourself. We would always recommend opting for a large, well-respected firm that you know you can trust and will give you the peace of mind that you need to ensure you are not investing in any scams.
Do They Put Their Money Where Their Mouth Is?
The most well-respected businessmen put their money where their mouth is and will invest much of their own wealth along with their investors. When you are investing a lot of cash, you want to know that your investment manager is also committed to this and won’t start to gamble too much with your hard-earned money. If they too have stakes in this investment, they are far more likely to avoid taking excessive risks in the market! This will provide you with the confidence you need to align your strategy with that of your manager’s.
Investing is something that takes time and patience in order to be profitable, so make sure you are not sucked into these scams that will cause you to lose significant amounts of money. Do your research and always be 100% confident in any investments that you are making. If you suspect that you've been subjected to excessive trading by a broker, seeking legal assistance from securities fraud attorneys can help you understand your options and protect your investments.
