How to Recognize the Risk of Investment Fraud

Investing can be a great way to save for retirement, take care of your family’s future, and get the most out of your money. When it comes to investing, risk can be unavoidable, but scams and frauds are a problem you shouldn’t have to face. By being careful about where you invest your money and learning how to recognize the risk of investment fraud you can stay safe and take advantage of money making opportunities. Here are a few warning signs that you might be dealing with a fraud investment.


1. Unsolicited opportunities


Similar to phone call scammers and internet phishers, investment fraudsters can put a lot of effort into seeking out potential victims. When people come to you unsolicited and ask for you to invest in something, it can be a big red flag. Generally, you should be the one seeking out opportunities, not the other way around. Scammers will often seek you out whereas legitimate opportunities often have to be sought out by you.


2. Promises too good to be true


If an investment promises to come with little to no risk and huge returns in a short amount of time then it is most likely too good to be true. Risk can be an unavoidable aspect of investing and the market almost always has periods of both gain and loss. Scammers often offer you perfect-sounding investments in the hopes of trapping you in their fraud.


3. High Pressure to Participate


If it seems like the person you are investing with is putting an uncomfortable amount of pressure on you, then it can be a sign that you’re dealing with a fraud situation. This can be especially true if the salesperson claims that the opportunity is limited time only. The pressure for you to commit quickly can be a way that fraud salespeople trap you into committing before you have a chance to do proper research. When it comes to legitimate investing, taking your time should not be a problem.

A common strategy of fraud salespeople can be to claim that everyone is jumping on their bandwagon and investing in their opportunity. Scammers can be adept at targeting people and will work hard to convince you that this is the perfect opportunity for somebody of your background.

How to Stay Safe


In addition to being informed about red flags to watch for, there are actions you can take to keep yourself safe. Verifying an investment opportunity with a third party can be a great way to get some peace of mind about new investments. There can be online tools and organizations available to help you prove that an opportunity is safe and right for you.  Simply by knowing about investment fraud tips, you can be protecting yourself.

By being wary of unsolicited opportunities that seem good to be true and taking time to do your own research without letting anybody pressure you, you can keep your finances secure. Fraud can be very dangerous to your financial stability, but it can also be avoided. Legitimate investments are out there and can be a great way for you to increase your resources.

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