8 Tips for Avoiding Investment Scams

There are various types of investment scams. Some are made via email or phone calls. Some are touted as offering tax relief or good investment opportunities in stocks. Below are some tips to avoid becoming a victim of fraudulent schemes.

1. Know the Right Investments

Many people fall for investment scams because they have no idea where they are putting their money. Thus, before you invest in something, you must understand what such investment is all about. It is always a good idea to consult an expert or read more about the kind of investment being offered before you decide to use your money.

2. Investment Details Must Be in Writing

Ask for brochures and other written materials that can help you better understand the investment being offered. Legitimate companies are more than willing to give you written information to help you make up your mind about the kinds of investment opportunities they are presenting.

3. Never Be Pressured into Investing on the Spot

Rushing potential investors or clients to make their decisions is one of the tactics employed by people behind investment scams. Never commit to anything without thinking things through.

4. Be Cautious about Offshore Investments

The promise of huge tax breaks is one of the reasons many people fall for offshore investment scams. It is important to note that investing in other countries can not only be risky, but it can also give rise to bigger tax liabilities later on. This is especially true for offshore investment countries that do not have stable governments or strong securities regulatory boards.

5. Be Wary about Investing in Commodities

The prices of different commodities, such as oil, gold and other minerals, are very volatile. No one can really ensure huge profits in a period of a few weeks or months. If you get an investment offer that assures you of big profits, you should be extra careful.

6. Always Verify the Authenticity of the Investment Offer

To ensure that you are not being offered investment scams, you should check the offerings with pertinent government agencies. Surf the Internet and visit the Better Business Bureau or the state securities' regulator to seek information about the investment being offered. When in doubt, it is always safer to pass up on an investment opportunity.

7. Learn More about Who’s behind the Investment Portfolio

A good investor conducts due diligence about the person or company behind the investment opportunity being offered. Seeing the website of the investment company online does not prove its legitimacy. Always check with the Securities and Exchange Commission. Moreover, do not judge the trustworthiness of the investment salesman based on his politeness, sophistication or intellect.

8. Never Fall for Promises of Quick Money or Big Profits

More often than not, get-rich-quick offerings are investment scams. When it comes to investments, there is really no way of knowing if a business entity will succeed or the value of its stocks will rise. There is no such thing as a risk-free investment. Schemes that promise to double or triple your money in just a couple of weeks or months are often dubious.

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