The Most Popular Investment Scams: Learn To Be Aware


Investing is one of those things that everyone knows they need to do, but not everyone is an expert in the process. As a result, through the years, we’ve seen various investment scams pop up. Today, we’ll talk about some of the most common forms of investment scams and provide some tips to ensure that you’re not the next victim!

Scam Brokers

One of the biggest investment scams out there today lies in brokers. Unfortunately, there are several scam brokers that make it their mission to steal the money they receive from unsuspecting victims. In general, this scam works by luring potential investors in with promises of riches made by investing with the right broker. From there, the investor puts money into their brokerage account and starts moving the money around, making what they believe to be smart investment choices. The only problem is that when it’s time to cash out, the scam brokers stop responding to their victims, keeping all of the money their victims have deposited in the process.

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Pump And Dump Schemes

Another incredibly common form of investment scam is known as the pump and dump scheme. This scam is an interesting one because it generally effects a wide range of victims in a very short period of time. Essentially, what happens is that a con-artist will write a fake report and make sure that it makes its way to the news some how. The report is designed to cause investors to start putting more and more money into a particular asset just after the con-artist purchases a large amount of the asset. This, of course, sends the price of the financial asset upward.

From there, the con-artists will cash out of their positions when they believe that the financial asset’s value has grown to its peak. Essentially, in doing so, the pump and dump scheme leaves the con-artist with profits while all of the investors that believed the hype and put money into the run take big losses.

Offshore Investing

Finally, offshore investing is becoming an increasingly popular scam. These scams are relatively simple. Either the con-artist will lure victims in online or with a simple phone call, telling them about an incredible opportunity in another country that will likely lead to big profits. As a result, the victims wire money to the con-artists for their investment. The only problem is that the tremendous offshore opportunity generally doesn’t exist!

How To Protect Yourself From These Scams

Ultimately, you can avoid most of these scam by following a simple 3 step process…

  1. Step #1: Work Only With Regulated Brokers – First and foremost, regulation is incredibly important. While there’s a euphoric feeling associated with working around regulation, the investing space is not where this should be done! Because of the fact that regulation adds a layer of protection for investors, make sure that you always work with regulated brokers.
  2. Step #2: Don’t Invest In Opportunities That Seem Too Good Too Be True – The term “if it sounds too good to be true, it probably is” is no more true in any other circumstance than investors. When making investment decisions, always ask yourself, “Does this sound too good to be true?”
  3. Step #3: Research – Finally, never make an investment decision without researching that decision first. If you are being pressured to move now without research, chances are that the investment is a scam. While getting in early is always a good idea, it never hurts to take an hour or two to research the opportunity and really learn what you’re putting your money into.

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