9 Essential Ways to Prevent Investment Scam

in Project HOPE8 months ago

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  • Learn how to recognize and prevent investment scam.
  • Avoid losing all your money. It is more important than some percent more returns.
  • What sounds too good is a lie.
  • Authorities are trying to protect you, internet forums and lists also can help.
  • Firms, which can’t be identified, aren’t worth following and give money to.

More Investment Scams Lately, and More to Come

By several sources, pyramid and Ponzi schemes, other investing scams, financial frauds are very widespread. For example, in the USA, the Securities and Exchange Commission uncovered 60 Ponzi schemes only in 2019.

That means an ‘ominous 30% surge from 2018 and also included the highest total amount of investor funds at issue in nearly ten years’ – wrote Ponzitracker.

This year it can get worse because of coronavirus scams. The US authority FTC alerted consumers in February and March about coronavirus hoaxes and frauds (here and here). Scammers woke up very early and offered “prevention, treatment, or cure” already in initial stages of the pandemic in their ads, e-mails. Others wanted “donations in cash, by gift card, or by wiring money”. Or, propagated new “investment opportunities”:

The U.S. Securities and Exchange Commission (SEC) is warning people about online promotions, including on social media, claiming that the products or services of publicly-traded companies can prevent, detect, or cure coronavirus and that the stock of these companies will dramatically increase in value as a result. (SEC)

What If Things Get Uglier?

Later things got uglier, and shortages have emerged for some important health items. Fake sellers claimed they had products like cleaning, household, health, and medical supplies. “You place an order, but you never get your shipment” – wrote FTC. They reminded anyone can set up a shop online under almost any name. Including scammers, of course.

One important reason investment scams were widespread in the last years can be the low or zero interest rates environment (ZIRP) in many countries. People were struggling to defend their savings from inflation. But the coronavirus pandemic leaves masses without jobs. If many people struggle to survive, if more poverty is spreading, crime can get also worse. Scammers and other delinquents are planning to take your money away.

In this post, I inform you about important common characteristics of investing type scams and how to prevent this type of fraud. (About technical advice on how to avoid other types of fraud, like fake shops, hacking or phishing read the safety tips of NordVPN, an online security service provider.) Fraudsters are still with us because they always find people who believe them. Don’t be a victim!

How Do You Recognize Investment Scammers, Then?

1. Fraudsters Promise Too Much

Prince(ss), do you believe in fairy tales? What sounds too good is always a lie. You must learn to distinguish real interests and investment returns from unreal promises. You don’t have to be an economist or investment guru, only make some basic research (Google or DuckDuckGo searches). Or ask other people who know more about it.

For example, let’s suppose, in the economy of your country, the average savings interest rate is two percent annualized (p. a.). Banks are giving you credits with 4-6-8 percent interest per year. If you investigate further, you can realize that other, riskier investments have returns of 8-16 percent a year. Like some dividend yields of company shares, high-yield corporate bonds. (The example is theoretical, but real, at least at the beginning of 2020.)

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Don't fall in the trap of scammers like a mouse

Then, somebody offers you five or ten percent – a month! Not a year. (And the person is claiming the investment is “totally secure”, of course.) This is the multiple of the rate of “normal” investments, 80-200 percent on yearly basis. Is it payable, indeed? Can any legal business reach such a profit? Or even more than this, because they must earn more than they pay you. Think about it.

The Power of the Market

The market does its work also in the investment industry. If a business offers higher returns than others with the same risk level, many investors will buy it. The demand pushes those high returns lower very soon. Risk and return are tied. The basic rule is: the higher the risk, the more return investors can expect.

8 More Points to Consider. This Post Continues On: Agelessfinance.com

More Important Readings for You About Your Money

(Photos: Pixabay.com.)


I’m not a certified financial advisor nor a certified financial analyst, accountant nor lawyer. The contents on my site and in my posts are for informational and entertainment purposes and reflecting my collection of data, ideas, opinions. Please, make your proper research or consult your advisors before making any investment or financial or legal decisions.


*"The swindlers are still with us because they always find people who believe them."

Totally true what you're saying. I agree with you on that. We have to be more and more careful because there's no doubt that these people who take care of these things are always on the hunt.

Very good post friend @deathcross, important topic you have brought up for discussion.

Gracias por leerme y comentar.

Your own website? Nice!

In fact, it's the 2nd one, the first one was a bad idea.
Thanks for checking in and reading.


Hello friend @deathcross, thanks for sharing.

Great reading friend, very good data, this helps the community to be vigilant and prevent any scam, follow these tips.

Thank you.

Indeed, thank you for helping people to be aware of all the scams currently taking place over the world.
People need to stay rational and not think there is an instant cure.

Thank you.