How To Identify And Avoid Investment Scams

We would all love our money to work for us. By this, we simply mean that we aspire the money we currently own to generate even more sums of money. Being ready to invest and knowing what to invest in is key. The top 1% of earners all have the same valuable knowledge, that your money should eventually work for you rather than actively working for money. Investing is the key to generating money that can multiply with just a few smart financial decisions, while also diversifying the investments you make. 

Unfortunately, where money is involved you should expect to find people trying to take it. Investing is a hot topic right now, especially now that information is so accessible on the internet, and even the lowest earning percentage of people are being enticed into making high-risk investments. The targeting of such investment scams on unsuspecting investors is becoming more common by the day, and the new strategies fraudsters are using are becoming harder to spot.


Red Flag Behaviours

If you are looking for tips on staying vigilant and avoiding being scammed out of money, take a look at the following red flags to look out for:


Pressuring Behaviours 

If the person that you are corresponding with about investing is making the process seem rushed, you should stay cautious that it might be a scam. The key to most successful scams is the quick process that scammers manage to get their victims to transfer their money before giving them a second thought. If they create the picture that the investment is a “once-in-a-lifetime opportunity”, then it likely is not. Take your time, and get as many opinions from reliable sources as possible.


Unsolicited Outreach 

Additionally, the most common scams usually start with unsolicited contact. Scammers outreach to the most vulnerable of people, which also includes new investors who are looking to make some quick cash. All experienced investors know to only deal with reliable brokers who have come recommended by others close to them. If you get contacted by a stranger claiming to be legitimate, who is also trying their hardest to pitch their investment opportunity, cut contact with them and possibly report them. 


Guaranteed High Profit 

The easiest way that scammers capture the attention of unsuspecting investors is the promise of high returns as a result of their investment. As mentioned above, experienced investors know that all investing involves risk and potentially won’t make that much return at best. Scammers like to convince their victims that a certain investment opportunity will give them a proven number, and as far-fetched as it might seem it can be convinced at the moment. Always take a second to consider whether such high returns are likely, as when something is too good to be true, it usually is.


Offering Favours 

Furthermore, scammers like to gain the trust of their potential victims by doing them favours with nothing in return. It might seem innocent and unsuspecting at first glance, but the smartest of scammers know what their targets want to hear or know. They might offer some insider information to their victims that they benefit from, and subsequently go on to advise them to invest with their fraudulent schemes. If someone you are speaking with seems inclined to help you with seemingly nothing in return, spend some time investigating their intentions further.


Scamming Techniques To Look Out For

There are many different forms of investment scams to watch out for. Having a basic understanding of the most common types might just save you from having your money stolen by investment scammers.


Pyramid Schemes 

Pyramid schemes have been around for many years now. Often, they seem just as innocent as a charity, however, there are usually poor intentions behind their operations. Pyramid schemes are impacting the lowest earners looking to step into the world of investing. Often they are most vulnerable to such scams, as they are looking to make a quick buck. They encourage individuals to become a part of their investor organisation, and make promises of high returns under the impression that you recruit as many people as possible below you to sell the same products or services. It might all look credible at first glance, however, the fraudsters are essentially recycling money from new investors to pay off long-term investors. All pyramid schemes eventually collapse, so keep an eye out for these investment scams.


Cryptocurrency Scams 

Additionally, if you are an investor looking to diversify your investment portfolio, someone has likely mentioned cryptocurrency at some point. Cryptocurrency is a digital asset that can be bought and sold for currency. Cryptocurrency scams have infested the investment world, simply because it is relatively new and unregulated by relevant authorities such as the FCA (financial conduct authority). Scammers have the advantage of having the growing interest of people wanting to become a part of the small percentage of people that are profiting from a cryptocurrency exchange. Crypto is an extremely high-risk investment to make, however, scammers are manipulating their victims into deporting their money into investments that they have manipulated. They often disappear before their victims can notice, hence the growing concerns around cryptocurrency scams.


Romance Swindlers 

One of the most surprising of the latest investment scams is romantic swindlers that are stealing millions from their victims. Scammers posing as potential romantic partners on dating sites and social media target individuals they deem as vulnerable to being scammed. They will quickly express their love and admiration for their target, and go on to gain their trust without revealing their true identity. Once they have got their victims where they want them, they are convinced into investing their money into a scheme the scammer has made up, and therefore lose a large quantity of money. Typically the scammers ask for a wire transfer, as they are much harder to trace once transferred. If you wish to be swindled online by a romantic partner, make sure that you have met the person, and have seen their real ID before committing to any financial transactions with them.



Ultimately, there are always going to be scammers surrounding all investment opportunities. They are quick to adapt to the ever-changing industry trends, therefore you should always do your research before making any investments. We would always recommend using a financial advisor of some form that can offer expert advice. Keep your money in your pocket until you know exactly who you are dealing with.