The Top 10 Investment Scams To Watch Out For
Investing hard-earned money can be an intimidating endeavor for an individual with no prior investment experience. However, education is the best defense against getting ripped off by con artists.
Paladin Research & Registry has compiled a list of the top 10 investment scams one should be wary of.
When structured favorably, annuities can be a solid choice for retired investors looking for a reliable income stream.
9. Investment Seminars
Before anyone pays good money for a ticket to an investment seminar, they should ask themselves, 'if the get rich quick strategy actually worked, why would the lecturer be giving seminars for a living?'
8. Prime Bank Scams
Anyone trying to sell high-return investment opportunities that they claim are "typically only available for ultra-wealthy clients" is likely a scammer.
7. Unregistered Investments
If photoshop can make Kim Kardashian look skinny, it can certainly make fake security registration documents look real. Investors should double check to make sure that securities are registered properly.
6. Life Settlements
Many peddlers of life settlements take advantage of terminally ill seniors and gullible investors willing to invest in fake policies.
There are better ways to make money.
5. Investing In Precious Metals
But investors should be leery of investing in companies claiming to hold bullion or own interest in a productive mine. Website images are meaningless; images of gold bullion can be downloaded from Google in a matter of seconds.
4. Currency Scams
The average investor does not understand the complicated terminology and trading strategies involved in currency trading.
If you choose to invest in something you don't understand, your fate (and your money) hinges solely on the trustworthiness of the person(s) with whom you are in business with.
There's nothing complicated about loan fraud: you lend money to a person or business, and they send you fake statements every month indicating interest accumulation that does not exist.
2. Promissory Notes
Promissory note scams are a slightly modified version of loan scams: you give someone money, they give you a piece of paper saying they will pay you back in the future. And then they disappear.
1. Ponzi Schemes
The most successful financial scam of all-time in terms of dollars lost. The beauty of the Ponzi scheme is that early investors do much of the selling on behalf of the scammers via word-of-mouth.
Early investors actually get paid the returns they are owed out of a pool of the later investors' principal.
Of course, the constant growing need for new investors eventually catches up to the scammer, but by that time millions of dollars are lost forever.
See the full infographic below.
Image credit: Public Domain
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