How to Spot an Investment Scam

December 12, 2022
Investor's Guide

How to Spot an Investment Scam

how to spot an investment scam

With the current pandemic, there has been an increase in online scams. People are desperate to find ways to make money and scammers know this. They will take advantage of you if they can. In this blog post, we will show you how to spot and avoid an investment scam.

What is an Investment Scam? 

An investment scam is an illegal scheme that tricks people into investing their money in fraudulent or high-risk investments. Scammers use deceptive tactics such as pressuring you to invest on the spot, guarantees of high returns, complex products, and fake endorsements to lure unsuspecting investors into losing their hard-earned money.

How to Spot an Investment Scam 

1. Pressure to buy 

It can be exciting when a potential investment opportunity presents itself, but it's important to always exercise caution. Legitimate investment firms will never pressure you to buy immediately because they understand that every person's financial situation is unique and requires careful consideration. If someone is pressuring you to make a hasty decision, chances are it's not a legitimate investment opportunity. Trust your instincts and take your time before making any big financial decisions - if something seems too good to be true, it probably is. 

2. Guaranteed returns 

It can be tempting to invest in something that promises guaranteed returns, but the truth is that there are no guarantees in the world of finance. Any individual or company offering a foolproof investment opportunity should raise a red flag. In fact, these types of guarantees often turn out to be nothing more than fraudulent schemes. It's important to do your own research and exercise caution before investing your money.

3. Complex products 

It can be tempting to invest in products that promise large returns, but it's important to remember the old saying - if it sounds too good to be true, it probably is. Scammers often use complex language and convincing sales tactics to lure unsuspecting investors into losing their hard-earned money. This can be especially true for investments that may be hard to understand or that involve high risk. 

4. Fake endorsements 

It's no secret that celebrities have the power to sway public opinion and drive consumer behavior. So, it's not surprising that some may use their influence to promote investment opportunities. However, just because a celebrity or social media influencer endorses a particular investment doesn't guarantee its success. In fact, it could be a red flag to be wary of any such promotions. 

5. Unknown firm 

Make sure you research any firm before investing with them. One way of researching the company is checking the Securities and Exchange Commission (SEC) website and review if they are registered investment companies. You should be able to find information about the firm’s history, management team, and track record easily online. If you can’t find anything, it’s probably a scam. 

How to Avoid an Investment Scam 

Spotting an investment scam isn't always easy, but it's important to be aware of the signs so you don't fall victim to one. If something sounds too good to be true, it probably is! Do your own research and never invest in something unless you're 100% sure about it.

When investing in insurance in the Philippines, it’s best to go directly to a company that has a proven track record such as InLife. Talk to one of our Financial Advisors today.

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