7 Ways to Avoid Investment Fraud

Share
Facebooktwitterpinterestlinkedinby feather

7 Ways to Avoid Investment FraudThese days, you can’t be too careful when it comes to investments. And if you’re older, you’re a prime target for fraudsters. That said, anyone of any age is vulnerable. Here are a few key things to keep in mind when you’re considering investing.      

Ask Lots of Questions

Of course, you’re going to ask questions, but make sure you ask the right ones. Is the product registered with the SEC or state securities agencies? What are the fees? How does the company make money? What things might affect the value of the investment? Are my investment goals aligned with the investment? How liquid is this investment? For more ideas about what questions to ask, check out this comprehensive resource from the U.S. Securities and Exchange Commission.

Do Your Research

And we don’t mean simply Googling them. If you’re thinking about investing in a publicly-traded company, go immediately to the SEC’s EDGAR database. You can look up the prospective company to see if it’s legitimate.

Beware of Unbelievable Returns

If something sounds too good to be true, chances are it is. If you hear that the investment will make “incredible gains,” is a “breakout stock pick” or has a “huge upside and almost no risk,” these are big red flags of fraud. Further, if the salesperson promises a guaranteed return, you know this isn’t true; every equity investment has a modicum of risk.

Resist ‘Act Now’ Offers

If someone tells you that this investment is a once-in-a-lifetime offer and it will be gone tomorrow, walk away. Another scam tactic is one that claims “everyone is investing in X stock, and so should you.” As irresistible as this might sound, don’t succumb to the pressure. It’s a trick.

Avoid Reciprocity

One of the most common lures that tricksters use are free seminars that include lunch. They play on your guilt and figure that if they do something for you, you’ll return the favor and invest. It’s never a good idea to invest on the spot. Take the materials home and do your research. With that said, not every free seminar is bogus. Just follow through with your due diligence and protect yourself.

Know Your Salesperson

We’re not talking “know,” as in you follow them on social media or you have a number of mutual friends and they come highly recommended. But even if you’re connected with them through a seemingly respected company and you “feel” like they’re trustworthy, don’t trust blindly. Check them out at BrokerCheck, an online database maintained by the Financial Industry Regulatory Authority (FINRA). This is a nongovernmental group that watches over securities firms and dealers. Remember: credibility can be faked. Don’t be duped.

Stay Away from Robocalls, Emails and Late Night TV ads

Let’s be honest, legitimate companies don’t reach people this way. However, swindlers can be very persuasive. But stand your ground. Don’t budge. When it comes to seniors, crooks view them as “more trusting” and less likely to say no. The truth is that older people are more often targeted because the supposition is that they have more assets to tap into – aka steal. Don’t let these buggers woo you. Hang up, hit delete or change the TV channel.

If you’ve taken every precaution and you still feel like you need help before you make an investment decision, consult your accountant or financial planner. When it comes to your hard-earned money, it’s worth all the time in the world.

Sources

https://www.investor.gov/protect-your-investments/fraud/how-avoid-fraud/what-you-can-do-avoid-investment-fraud


Disclaimer 

This entry was posted in Blog, Tip of the Month. Bookmark the permalink.
 

Get a FREE Consultation

Your Name (required)

Your Email (required)

Your Phone (required)

Get $50 to $100 Off Your Tax Return!!

Your Name (required)

Your Email (required)

Your Phone (required)

 

aicpanatp

 

Testimonials:

"Reginald can take a complex situation and make it very simple to understand. He is knowledgeable, personable and always displays the ultimate professionalism. (I just wish I knew how he keeps his desk so neat all the time!)" -Joe Bui

"I can't say enough about Singh Accounting. Reg is a life saver. I'm a self employed artist and Reg has helped me keep my financial goals on track for almost 8 years now and I can honestly say, he truly cares about each of his clients. He is THE best." -Ashleigh Sumner

 
 

News & Articles