Red Flags to Watch Out to Prevent Investment Fraud

Most fraudsters prey on people's good nature. They expect that their trustworthiness and the way they come across are enough to fool most people into giving them money. The thing is, there are certain red flags you can be on the lookout for, so you do not get into a trap. Below are a few of them.   

Guaranteed Returns

Every investment comes with a risk. No one on earth can guarantee results on an investment. Con men are very good at convincing people that the investments they make have guaranteed returns. One thing to always keep in mind is that the higher the promised returns, the higher the risk. So, if someone tells you that a high-risk investment option has guaranteed returns, your senses should be tingling. 

It Sounds Too Good to Be True

This one ties into the point discussed above. If an investment sounds too good to be true, it probably is. If you see an investment that promises higher than normal returns on investments, you should start looking for another adviser or investment.

The Halo Effect

A lot of con men depend on their credibility, trustworthiness or likability. Do not be fooled by other people's opinions of an investor or investment.

Pressure to Send Money Now

Most long-term investment options do not expect you to invest right now. They expect you to do your research and then make a decision based on your research. If someone tells you to send them money immediately, they are most likely trying to con you and you should run as far away from them as you can. 

"Everyone Likes It"

Watch out for pitches that stress how much everyone likes an investment option. No investment option is universally loved. Always think of the option plus any advantages of investing in it and keep that in mind when making an investment decision.

Reciprocity

Most people who commit investment fraud often want something in return for their efforts. Some of them use free seminars, free lunches or even free merchandise to get you to buy into their philosophy. If you find yourself here, it is always a good idea to step back and look at the investment from a higher view to see if what is being offered is genuine or is a way to lure in so you can lose your money. 

Always Do Your Research

The biggest weapon you have against investment fraud is the internet. Always start with research and due diligence before going into any investment option. Try to find as much information as you can about the investment option and anyone making itches on behalf of the company investment option. Do not use other people's opinions about the option too.

If you are sucked into a fraudulent scheme, contact a law firm with experience of investment fraud.

Conclusion

There are so many ways of losing your money with one of the most common of them being through investment options. Every time something seems too good to be true or even if you have doubts about an option, always take a step back and look at the option twice. Good research is also a very good way of ensuring you make the right decisions and do not lose your money. 

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