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Investment Scams to Avoid

Thousands of normal people on a yearly basis fall prey to investment scams that look far too tempting to let slip away and millions of victims suffer the consequences. Keep in mind, is something is unbelievably true, you probably shouldn’t believe it. Investment scams are everywhere, and here are some of the most prominent ones you will encounter.

Ponzi

One timeless swindle is the Ponzi scheme, an investor’s returns being paid using money of the investor’s. Fortunately, this scene was exposed when Bernie Madoff was revealed to have pulled off U.S. history’s biggest fraud back in 2009. Investors explained they had been attracted by the fund’s high returns lack of down years. Madoff is not facing the consequences of his actions, 150 years federal prison time.

Boiler Room

Another popular scam, the boiler room, is performed by giving ordinary people phone calls and attempting to convince them to purchase the newest, hottest investment. It is usually a foreign company stock they are selling which is not even legitimate. The smooth spiel and official looking documentation usually fools victims of this scheme, as everything is fake and if you invest your money in it, you will never see it return.

Investment Seminars

There are investment seminars out there that can teach you a thing or two, but some (typically free ones) will end up costing you more money than you ever anticipated when you are persuaded to invest in a scammer’s company. These scams are prominent in real estate, offering discounts for education to generating commissions from purchases in the future. The wisest choice is to research beforehand and do not invest any money until you seek the advice of a professional.

Day Trading Systems

While certain day trading systems could be effective, the truth is that most of them either no longer work or were scams to begin with. These con artists specialize in formulating systems that, although appearing to work with historical data, will ultimately fail when put to real application. After all, why would someone be looking to sell a system generating more than 50% annually for the small cost of $400?

Newsletter Scam

Enterprising swindlers sometimes send out a number of newsletters to clients, half of which giving advice to invest in a stock and the other half advising them to sell. When he learns which group he has properly advised, he will then send those people another recommendation to those clients only. This process is repeated until a small group have received good financial advise and he then convinces these individuals to invest in the newsletter’s paid version.

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