With the rise of scams taking advantage of people’s fear or promises of large amounts of money, it’s essential to stay vigilant. In this article, we’ll explore key insights on how to identify and steer clear of investment scams to protect your financial future.
PSA: All Investments Carry Risks: Always Research Before You Invest!
Before investing or giving away your money, thoroughly research and understand the risks associated with the investment opportunity. Here’s what you need to know:
Step 1: Identify Potential Red Flags
- High Returns at Low or No Risk:
Scammers often lure investors with false promises of guaranteed capital protection and ultra high returns. Remember, higher returns typically come with higher risks! There is no free lunch in this world. If anyone tells you that their product has no risk yet comes with high returns, chances are, the high returns are going to them, fully paid for by you.
- Extreme Pressure & Fear Tactics:
Beware of suspicious time-limited offers, special rates, and other fear tactics designed to rush you into committing your money on the spot. Focus on understanding the investment rather than falling for these tactics.
Some commonly heard tactic include statements like:
- “Sign your $100,000 now, otherwise, in the next minute, the market changes, and you won’t get such an offer again.” While this can be true in some cases, it’s worth noting that retail investment products rarely require so much upfront capital and neither will it see such big changes within such short periods of time.
- “Sign now or the police will arrest you for illegal activities (usually made up by the scammers)”
Pretty sure many of us have come across some of these. While 99.9% of us ignore them, there is still the vulnerable 0.1% we hear about losing their life savings from such scams.
- Offer of Abnormally High Commissions:
“Earn $10,000 in a few days!” Does this type of statement sound familiar? Many of us have seen such ads and remember them because it attracts lots of attention.
However, legitimate investment schemes rarely offer abnormally high commissions to investors for referrals. Scammers use this as a trap to attract greedy people and expand their investor base quickly.
- Fictitious Track Records:
Investment scams may claim impressive track records, awards, or testimonials from supposed satisfied customers. Always verify such claims with independent sources. If unable to verify, it’s better to err on the side of caution and assume false until proven true.
Step 2: Check the Company’s Background and Regulatory Status
- Confirm Regulatory Claims:
Some scams falsely claim to be regulated by authorities. Verify these claims on the Monetary Authority of Singapore (MAS) website.
Use MAS resources like the Financial Institutions Directory, Register of Representatives, and Investor Alert List to confirm the legitimacy of the entity you are working with.
- Verify Information:
Verify the entity’s provided information, including representatives’ backgrounds and the entity’s track record, independently.
Do not be afraid or hesitate to ask the entity questions to fully understand the investment opportunity. Be cautious if they avoid answering your inquiries or provide unsatisfactory answers.
Conclusion – Protect your financial well-being with vigilance!
Investment scams have the ability to cause substantial financial damage, but by maintaining a state of high vigilance and awareness, you can safeguard your interests. If you suspect you’ve encountered an investment scam, inform your bank and report it to the authorities. Safeguard your financial well-being by sharing your experiences with family and friends. Remember, if an investment appears too good to be true, it likely is.
If you’re still in doubt, feel free to reach out for advice with our professional, friendly wealth managers at no cost and no obligation!