How to Avoid Fraudulent Investments

There is always a risk in investing, in the sense that you may actually lose money because of fluctuating investment values. That is understandable. But there is another risk that is just unwarranted – being exposed to fraudulent investments.

Investment fraud occurs when an investor has been persuaded to invest in a particular company, stock, or any commodity, because of false information. This usually results into money loss, but unlike fluctuating investment values, this money loss is unnecessary.

You worked hard for that cash, and the last thing you want is to fall victim to a fraudulent investment operation and lose your money just like that. Here are some of the things you can do to avoid investment fraud.

Know the company

Before anything else, know the company you are planning to invest to. First, it is important to know if it is a legitimate company, complete with documents such as licenses and registrations. Second, it is also important to know what this company does, so you can at least have an idea on what you are getting into and how you are going to get returns.

Know the salesperson

You should also look into the person who is trying to persuade you to invest in that company. First, make sure that this person has a legitimate connection with the company and actually registered to sell the commodity. Second, it is also wise to investigate whether this person has a bad history, particularly regarding misconduct.

Be doubtful if it sounds too good to be true

The website of Erez Law mentions that one of the most common signs of investment fraud, particularly Ponzi schemes, is that it offers high returns with no risks. Usually, investments with high returns are extremely risky, so you should be doubtful if an investment promises high returns with little to no risk.

Be doubtful of unsolicited offers

Investment pitches that are unsolicited are shady, especially if they are using ridiculous tactics to persuade you, including good testimonials from unidentified individuals. Be more doubtful if this investment is overseas. Your money is very vulnerable outside of the country, because you have less control and power over it. If you lose your money, it will also be harder to track and retrieve.

 


Leave a Reply

Your email address will not be published. Required fields are marked *