How to Identify Investment Scams | Warning Signs, Red Flags

How to Identify Investment Scams?

how to identify investment scams

Having a single source of income is often not enough to meet financial needs in today’s world. As a result, many people consider investing part of their capital in one or the other investment options

However, with the rising online platforms the number of scams is increasing significantly resulting in major financial losses to people.

Scammers use their smart tactics to lure an audience that seems too good to be true. This makes it even more important for people to stay alert and invest cautiously.

Hence to begin smartly, it is more important to learn the ways of how to identify investment scams.

Investment Scams Warning Signs

How many of you have seen Crime Patrol used to stream on television with the tale of one or the other crime?

Most of you, right, or at least you might have heard of one common statement made by the host Anup Soni—’Har jurm aane see pehle dastak data hai, zaroorat hai to bus use pehchanne ki aur satark rehne ki.’

Similar to this, Investment scams also give you a lot of warning signs and red flags. All you have to do is recognize them at the right time to protect yourself from falling into the scammer’s high return scheme trap.

Here are some of the major red flags that the scammer gives in most of the types of investment scams:

  • Promises of High Return with Less Risk

“Sir, our company has come up with an investment scheme where you can gain a minimum 20% return per month.”

Tempting enough, isn’t it?

Most of the investment scams begin with a similar statement. But the truth behind this is the loss of your hard-earned money. We came across one such scam where Neumec Estate Developer LLP did a scam of ₹35 lakh with a lady promising a high return of 12% per annum.

Always remember that none of the investment whether it is a stock market, real estate or any other venture comes without risk.

If someone claims you of high return with little or no risk, get away from that immediately as nothing like that existed in the real world.

  • Pressurizes You to Act Quickly

“Sir, this investment scheme is for a limited period only. So, please take a fast decision otherwise you can miss this golden opportunity for life.”

Now hearing such a statement often confuses you and makes you invest in any random scheme without understanding or thinking.

But the reality is, this is there another trick to push you into their trap.

A legitimate investment opportunity won’t vanish overnight. So, always take your time to think, ask your doubts, and validate all the details before investing.

  • Offers Complicated or Secretive Strategies

“Sir, this is a cutting-edge strategy that only fund managers and proprietary traders use.”

Quite heavy words for a beginner to understand, isn’t it?

But this is another tactic of these scammers that they often use to confuse investors and to make them invest in their fake schemes.

When it comes to investment it is important to understand things first. A genuine financial advisory will use a simple way to make you understand how an investment scheme works and provide complete transparency.

It is therefore good to stay away from investment schemes that are difficult to understand or provide incomplete information.

  • Provides No Clear Documentation

“Sir, we are a 10-year-old company, there is no need for documentation. We can connect on WhatsApp to proceed with investment.”

Another major investment scam red flag that most beginner investors overlook just in the greed of earning quick gains. However, their negligence cost them big later when that one phone call and few WhatsApp messages turned out to be a nightmare.

Always remember, that legitimate investments always come with proper documentation and enlisted terms and conditions. Make sure you consider asking for such documents with everything in writing before investment.

  • Don’t Provide Answers to Questions

“Sir, we do not provide any calling number. You can raise your concern by email.”

Scammers know what they are doing and always stay one step ahead. They often contact you on WhatsApp and do not provide you with any calling number for raising concerns.

The only way you have to contact them is either WhatsApp messages or email which sometimes are not enough to get answers to your queries.

It is therefore important to consider this warning sign seriously before investing.

Conclusion

Investment scams can happen to anyone but those who stay cautious and alert can avoid falling into that trap. Understand the commonality between all the frauds and how investment scams work to protect yourself from financial losses.

Consider the above tips before making any investment decision or coming across any investment scheme. Keep your money safe and make well-informed decisions!

If any of the investment schemes seems to be doubtful, it is better to stay away from it and wait for the right opportunity.

Have You Been Scammed?

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