Money Advice

Buyer beware: these investment scams can ruin your financial future

Posted by The Simply Money Advisors Team on Oct 25, 2017 3:34:54 PM

There are people at every corner trying to get their hands on your hard-earn money. It can be easy to get carried away with promises that you’ll make a ton of money, so it’s key to examine what you’re really investing in.

That’s why it’s important to be educated and take time to think through all your investment decisions. While some of the investments listed below are offered legitimately, here are a few investment scams to stay clear of:

Currency exchange

This can be an extremely profitable trick for a scammer. Currency interest rates continuously fluctuate, so it’s easy for them to make a pretty penny on this transaction. It’s a mysterious undertaking and extremely complex. It makes the scammer seem credible since the trade may be so confusing.

Life settlements

Scammers often prey on people like your parents or the terminally ill for this con. They do this by investing in the interest of healthy individuals’ insurance policies but pay the policyholder a below market rate.

Unregistered investments

An ‘unregistered investment’ is one that isn’t registered with the Securities and Exchange Commission. And while some of these are legitimate, like some hedge funds, others are not. The bad news? If the investment you’re considering has documentation, that still may not mean it is a registered investment. Scammers can fake financial documents to make an investment look registered. Do a little digging before handing over a check.

Bank scams

Did a ‘bank’ seek you out to tell you about a new investment opportunity? Did they tell you they had an exclusive offer for an ‘elite’ group of people? This is most likely a scam. The bank may promise extremely high returns on such an investment, but buyer beware! Do your research before moving forward. And remember with high potential rewards comes high risk.

Private placements

A private placement is a type of sale in which a company opens the purchasing of shares to only a select few investors. These can be prime vehicles for scams, especially if it’s in the form of a loan, because you don’t know who the money is being lent to. You may be unsure if they are creditworthy or collateralized. They may give you a monthly report or printout stating how well your money is doing, but these documents could be fake. 

Pyramid schemes

Pyramid schemes or Ponzi schemes take money from new investors and give it to investors who bought in before you. In a sense, you’re just exchanging money. There is no real return or investment; the money is just changing hands in order to look like investors are receiving a high return. Take, for example, the Bernie Madoff scam.

The Simply Money Point

There are many ways scammers and criminals try to steal your money. Learn how to protect yourself and what to look for. Remember: if it seems too good to be true, it probably is.


Topics: Scams & ID Theft Alerts


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