5 Ways How To Spot Fraudulent Investment Scheme


Fraudulent Investment Scheme: How to spot them?

Are you being duped or lured into investing your hard-earned money by promising high returns in an unscrupulous financial investment scheme? If yes, sad to say, you are not alone as more and more people have fallen prey into numerous fraud transactions.

Needless to say, these scams eventually exploit the trust and friendship that exist in groups of people who have something in common—to generate possible high yield returns. Are there practical tips how to avoid  potential fraudulent investment scheme? The short answer is yes.

However, you have to bear in mind that being financially literate is the best weapon against fraud or dishonest scheme. Below are helpful tips about 5 ways how to spot fraudulent investment scheme so that you will be guided with your financial decisions in the future.

1. Educate yourself and understand the business model

If you want to be successful with your financial investment journey, one of the most important things is to educate yourself and understand how business model works before making any financial decisions. If the company has a vague investment methodology and failed to refuse or explain how you will possibly generate returns, chances are it is a scam. Therefore, don’t make a decision until you empower yourself and you’ve thought about it a hundred times over.

2. Promise of high return in a short period of time

One fundamental principle of being financially literate is that acquiring wealth is being built over a period of time. In other words, there is no such thing as being a millionaire in a short span of investing.

However, the reason why many people are being tempted to invest their money is that they are blinded with promising rewards or potential high returns. When you have been promised of exorbitant returns and you think the offer is too good to be true, you’ve got to be cautious and think twice.

3. Investment company has a good reputation and leaders have integrity

While it is true that every investment vehicle has certain level of risks, it is worth to pay attention the credibility of the leaders and of the investment company itself.  Check out everything – no matter how trustworthy the person seems who brings the investment opportunity to your attention.

The proven track record of leaders including his past performance indicates a good integrity of the company. If people involved have record of unethical fraud practices, you should be wary and seek advice from investment experts. Do your homework and learn more about people and the investment company.

4. Earning money without product movement or services

When you invest a huge amount of money in any financial investment, make sure there is an outright product or services being received. Fraudulent investment scheme needless to say has emphasis solely on recruiting new distributors, not the products. Be cautious about people who are trying to persuade you to invest without certain products or services involved.

As new investor, scam usually occurs when people tried to use your money to compensate investment fund for other old investors. When the company has come to a point of no recruits or referrals, it will eventually collapse as the company merely depends their operation from the fund they are getting from new clients or investors.

5. Approval or recognition from the government

It is essential to know the company is regulated by the government  and ensure they have permit to operate. In the Philippines, for instance, Securities and Exchange Commission (SEC)  issued public advisories and warnings over fraudulent investment scheme and has the jurisdictions and supervisions over all companies  and corporations in matters of sanctions and pertinent violations.

If you want to find out more about the legitimacy of any financial investment company, fake firms or companies can be checked by looking at SEC whether they are registered or not and have licensed to solicit investments. Any business investment entity should be listed as active or in good standing in the government where it was incorporated and must file and pay annual taxes in order to maintain its good standing.

“Wealth from get-rich-quick schemes quickly disappears;
    wealth from hard work grows over time.” Proverbs 13:11

This post was first published at the author’s blog richlyblessedtoday.com

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Jun Amparo

Jun Amparo

JUN AMPARO is the author of two inspirational books about personal finance and marriage.  He is nominated as Huwarang OFW 2019 organized by The 700 Club Asia and is pursuing his doctoral study in education. Presently, he is working as a university counselor and lecturer at Asia-Pacific International University in Thailand.