How to Avoid Fraudulent Investments

Posted by on July 10, 2017 in Investing | 0 comments

Investing can be a sophisticated financial matter, and like any sophisticated thing, it can be vulnerable to fraud. This is because people may easily give in to technical and flowery words, unrealistic promises, and high returns, when they are not very knowledgeable.

In fact, investment fraud lawyers even exist, because the threat of fraudulent investments is very real. But avoiding fraud will always be a better option than getting legal help because you have already been scammed. Below are some of the things you can do to avoid such a thing from happening.

Check registrations

Before anything else, it is important to check the credentials of the company you are being asked to invest to and the salesperson who is doing the asking. The company should be properly registered and licensed, while the salesperson should have a legitimate connection with this company and actually has the right to sell securities. If they don’t have the proper credentials, it is likely that they are fraudulent.

Be doubtful of high returns

Pay close attention to the sales speech. If the salesperson claims that the investment will have high returns and have very little risk, be doubtful, because it is likely that this is not true. Most investments that have high returns have very high risks as well. If you feel like the investment is too good to be true, trust your instincts and say no to the fraudster.

Be doubtful of social proofs

Again, this is regarding the sales speech. If the salesperson claims that everybody is investing in this particular investment, without even explaining why the investment is sound, he may be trying to give you social proof that the investment is legitimate, even though it is not. There are many kinds of investment scams that mainly focus on the number of investors. The website of Erez Law has described Ponzi schemes as one of the most common.

Learn how to say no

You should not feel obligated to give in to the investment company and the salesperson. After all, it is your hard-earned money and you deserve to control on where to put it. If you don’t like the investment or if you feel that it is a fraud, don’t be afraid or guilty to say no.

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