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Protect your Money from Investment Scams

When it comes to investment and investing, the popular saying “A trial will convince you” does not hold true. Rather, recklessness with your investment decision will cost you hard earned money, destroy what you worked hard to build and close your mind to real opportunities for extra income.

How do you access investment opportunities and protect your money from investment scams?

Investment scammers operate by getting you to put up money for a questionable investment – or one that doesn’t exist at all. In most cases, you’ll lose some or all of your money. Examples of such scams include; Advance fee fraud, forex scam, MLM (with no product or services in particular being sold), Ponzi or pyramid schemes, penny stocks, and the list continues as scammers continue to think and come up with new ways to scam the unwary. Below are five first lines of defence to protect you from investment scammers.

  1. Awareness: Increasing your awareness of financial and other scams out there. This would be your first defence. 
  1. Due diligence: Before subscribing to any scheme out there it is strongly recommended that you conduct your due diligence first. Here is where you should seek trusted professionals, such as your financial adviser, lawyer or accountant, evaluate any investment opportunity pitched over the telephone or at an investment seminar. 
  1. Be dispassionate: Scam artists will do anything to gain your trust, in order to entice you to invest in their schemes. They may make promises of huge profits from investing in offshore markets, and may even guarantee the returns to give you a sense of security. As a defence, always try hard to keep your emotions under control.
  1. Rate of return to risk level: When someone offers you returns that are more than the going rate, there is high chance that you will lose your money. Like they say, “if it sounds too good to be true, it probably is.” With most investments, there are no guarantees. Whenever you get guaranteed high returns, this is a red flag that the investment is likely a scam.
  1. Look it up online: The internet is a ready resource centre to double check what others are saying about an investment opportunity. While not all the information out there can be relied on, if done right, you would definitely glean some valuable information.
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The above is just a basic checklist. While they are helpful, you owe yourself a responsibility to keep your hard earned money safe and ever growing.

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