Investment Scams: 5 Ways to Identify Them

There is always an element of risk versus reward with an investment. You are never guaranteed to get all your money back.

However, some investment opportunities are straight-up scams. Ponzi schemes and other investment fraud is up 70% since the beginning of the Covid-19 pandemic.

So, how does one differentiate a perfectly legitimate investment from a conniving scam? Keep reading to find out 5 helpful tips to stay safe from criminal fraudsters.

Making Promises

For example, they might say that you will “undoubtedly make a profit” by investing with them. Or you may have a company tell you that “all our investments are risk-free.” Not possible.

A perfect example of this is the Ponzi scheme. Ponzi schemes (such as the infamous one run by Bernie Madoff) offer “guarantees” of abnormally high returns (20% or more).

Low Risk, High Reward

Background Information

See if you can seek out any credentials that prove their legitimacy. If you can’t find any information, this is a very good indicator that the investment deal is a scam.

Fraudsters are usually very pushy and try to rush you into making a rash decision. They tell you you have to act “immediately” or else you’ll lose out on the deal.

Pushy Salesperson

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