If you’re looking to invest and make money in the stock market, chances are you’ve seen people who are advertising a “sure 100% return,” or similar incredible promises. You might ask yourself, “How is this possible?” Well, in most cases, it’s not. And in most cases, the offers and promises are misleading, if not outright fraudulent.
Even the most sophisticated and experienced investors can be caught up in a good investment scam, as evidenced by the many professional money managers who placed their clients’ money with Bernie Madoff. So what are you, the average-intelligence, average-experience investor, supposed to do to protect yourself from unscrupulous con artists who try to separate you from your hard-earned money?
There are several signs that can alert you that something is not right with an investment scheme, provided you pay attention and know what you should be looking for. Here are 10 of them:
ADVERTISING
1. If it seems too good to be true…OK, you know this.
You know it. There are rare individuals who can occasionally make a killing in the market, but they are few and far between. And they generally can’t do it consistently, month after month, year after year. So if someone is guaranteeing a particularly high return and claims that it is steady as a rock, you should run the other way.
2. They are offering a “guarantee.”
No one can guarantee a specific return, unless they’re offering fixed income products like bonds or Certificates of Deposits (CDs). No stock market return can ever be guaranteed. Period.
3. It’s a complicated or unique opportunity.
Sometimes people claim that they have access to a unique opportunity, something that is not offered to regular people. They might use fancy terms like “prime lending certificates” or “private placements,” which actually mean nothing but sound pretty impressive. Or they may claim to have mastered a technique involving futures or forex.
ADVERTISING
4. New business models.
Maybe you are offered the chance to get in on the ground floor of a new, “world-changing” technology. Biotech and green tech companies are particularly popular right now. A company claims it holds a patent for something that would truly revolutionize the way the world works, and you are so lucky that you can get in before the big institutional investors do. Guess what? The technology might sound great in theory, but odds are good that it doesn’t even exist.
5. You are brought in by someone you know as a “referral.”
These are some of the oldest scams in the book, and they rely on the power of social circles. The scammer will pay off the people in the initial rounds of the scam, in order to persuade them to bring in more of their friends and associates. You are convinced because you actually know someone who got paid the promised amount. You might get lucky and actually get what you were promised. But once the scammer gets what they want, it’s, “Bye-bye!” And you will be left holding the (empty) bag.
6. Urgency.
Many con artists will pressure you with “limited time offers” in order to force you to make a quick decision. They don’t give you the time to consider whether or not their offer truly makes any sense at all.
⌄ Scroll down to continue reading article ⌄
How Fulfilled Are You In Your Life?
If you want to stop struggling and live life to the fullest, Lifehack has a solution for you.