Spot The Not: 4 Tips To Avoid Investment Scams

investment scam

It can be tempting to jump at the opportunity of investing your hard-earned money into something that promises an incredibly high and reliable return. After all, who doesn’t want to earn a lump sum of cash without exerting any effort?  

But, you might want to take a step back and think more cautiously if someone approaches you and offers to double or triple your investment in a short span of time. You may be falling victim to an investment scam, and, before you know it, you’ve already invested a lot, and you can no longer get it back.  

How To Avoid Investment Scams 

Fraudsters and scammers usually work at a phase you can’t easily predict. They’re innovatively professional at what they do, and are always coming up with different ways to reinvent their sleazy tactics. In most cases, becoming a victim doesn’t only mean suffering from a financial loss. Your identity may even be compromised, and you can just imagine the emotional distress you have to go through. 

The key is to be skeptical and to always do your research before making any kind of investment. In addition to being skeptical, here are more tips to avoid getting lured into an investment scam you’ll only regret: 

1. Verify Registration And Credentials 

If someone’s asking you to invest, whether or not it’s a person you already know, the most helpful tip to see if it’s a scam is to verify their business’s registration and credentials. Thankfully, there are now several websites and online databases that you can check for such information.  

Any type of investment should be registered with their provincial or local securities regulator. Forex brokers, for example, can be easily checked and verified through free websites to confirm their legitimacy. Ask for the name of the broker and their firm so you can check their credentials. If you can’t find it anywhere, it’s a major red flag, and you might want to think many times before committing to an investment with them.  

Although not all investments need to be registered to qualify as legitimate, most scams often involve unregistered outlays. You can ask your contact why they’re not registered, and if it’s a scam, they’ll most likely back off a little from persistent follow-ups since they know you’re not the naïve type who quickly falls prey to suspicious transactions. 

2. Do Your Research 

The moment you’re offered an investment, whatever it may be, you can start doing your research so you’ll know more than the information presented to you. Complicated investments, such as penny stocks, precious metals, and cryptocurrencies, are often tangled and not always transparent, thus, allowing con artists to operate undetected. 

If you plan on investing in such complex schemes, make sure you understand every aspect of it so you won’t get easily scammed. Do your research well and ask expert advice from financial experts, such as an accountant or lawyer, so you can be more informed about the complexity surrounding the investment. Understand the risks involved, how it works, and other fees that you need to prepare for. 

3. If It’s Too Good To Be True, It Probably Is 

Not everything that shines is gold, and this statement can’t be any truer when it comes to investments. If an unsolicited offer sounds too good to be true, think again and try to keep an open mind. Most of the time, fraud victims are lured into the scam even when they know themselves that the return of investment is unbelievably high.  

Even when the scammers would present proof of payouts and other transactions to get your trust, being skeptical at any given circumstance is your biggest advantage. Most frauds, such as pyramiding schemes, work that way—you may get profit a few times to build trust, and when you start investing more and more, that’s the time the fraudsters would disappear, leaving you with nothing. 

4. Take Your Time 

Rushing is never a good approach in almost anything, particularly when it involves investing your hard-earned money. It’s always best to take your time, do all the legit checking, and research at your own pace. If the company is real, they won’t mind you doing what you feel is necessary for your security and peace of mind. 


Investment scams aren’t a new concept, but, surprisingly, there are still people who’d fall victim to such schemes. The reason behind this is simple—they fail to spot the signs of an investment scam. Don’t be one of those victims and learn how to avoid fraudulent schemes that are out to drain your money, ruin your life, and even affect your emotional and mental health in ways you can’t imagine. 

Make sure you do ample research before making an investment. Verify their registration and credentials as an extra layer of guarantee. Take your time in doing all the necessary verification and research. All of these tips could go a long way in ensuring your hard-earned money doesn’t go to the wrong hands and intentions. 

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