If you are experimenting with investments for the first time, you might come across a lot of deals that are way too good to be true, which might exactly be the case. Anywhere there’s money, there are scam artists. We might pride ourselves on being able to detect email frauds and phone calls that try to scheme us out of our money; it is harder to identify them with investments if you are not familiar with the signs.
The world of investments is entirely made up of the exchange of vast sums of money, so it will be hard to financially cope with even one incident. Here is a list of scams you might come across and their signs.
1. Share Promotion Scam
Scammers will contact you at times, informing you about a great investment opportunity. They will emphasize the promise the share holds and how, even if it falls through, it will be low risk. Often these scammers will try to urge you to act as quickly as possible so that you make a hasty decision to invest.
The motive of these scams is to increase the value of stocks so that they can sell shares at a higher price and make a considerable profit. Afterward, you will notice that the value of the shares will dip.
When it comes to buying stocks, even things such as mere fraudulent advice can cost you a fortune. That is why you should always do proper research from trusted sources such as the NoBSIMReviews blog.
2. Investment Seminars Scams
Investment scams are not always limited to phone calls and emails, and sometimes these scams are as elaborate as an entire event. However, the sum of money they can scam you out of is massive.
In the seminar, everything will seem reasonable except for a few things which will feel off. For example, they will overcharge you for investment stock reports. They may also pressure you into buying stocks while highly discouraging independent opinions.
On top of that, they are also gaining from the attendance fees of the seminar.
In these types of scams, focus on the telltale signs, they will charge you an absurd amount of money for any product or service. They will also discourage taking advice from anyone outside of their loop. Additionally, they try to pressurize you into spending your money on their services.
3. The Ponzi Scheme
You may have heard about the Ponzi scheme from headlines of news reports or even pop culture shows, being used as an exciting plot point. What you may not be aware of is that the consequences of being involved in it are severe.
The scheme involves some initial investors who receive a significant return on their investment and further spread the news on this great deal to their friends and fellow investors. As more investors join, the pool of investment increases. In reality, what is happening is that the new investors’ money is going to the initial investors’ returns.
At one point, it becomes difficult to recruit new investors, and that is where the scheme starts to lead to its unavoidable fate. As investors leave, the culprits of the scheme escape with the money they have accumulated.
4. The Boiler Room Scam
This scam is named after the office rooms people rent out or use to perform this scheme. Usually, in a scam like this, the scammers work really hard on grilling the investors and putting them under a lot of pressure to invest. These scammers will contact you, trying to persuade you about a very good opportunity to invest. They will show you promises of high returns and low risk.
This tactic heavily relies on pressurizing investors with persuasive tactics such as telling investors that the window of opportunity to get in on a great investment is very small, and if they are delayed, they will lose the chance.
By putting the investor in a lot of pressure, investors might not follow through with their usual process of research on investments as they think the time is minimal. This scam is particularly hard to catch, but there are some telltale signs.
For example, they will refuse or avoid telling you about their office address. Furthermore, they will most likely be from strangers, maybe even from different states or countries. Another clue is identifying the way the high-pressure tactics they use to convince you.
5. Pump And Dump Scheme
The pump and dump scheme benefits from the ease of circulating misinformation. Scammers will invest in companies that hold very cheap stocks. They invest in companies so small because there is little information about them, on the other hand, it is hard to manipulate information about larger companies.
After they buy stocks, they spread elaborate rumors about the company which helps boost their stock value. For example, they might say that the company is developing something way better than any 5G technology or that they have some cure to a disease.
These rumors might be elaborate but they are enough to suddenly boost the stock value. After the value has increased, the scammers quickly sell their stocks and escape with the money they made with overvalued stocks.
As the value is built on rumors, people will eventually realize their mistake when the company is not showing results. As people withdraw from the company, the stock prices will plunge suddenly and drastically.
The way to combat schemes like this is always to do efficient research through trusted investment newsletters. Furthermore, before investing anywhere, always check your facts. You should also look up the companies yourself to see if the information and conclusion you have come to are valid.
Most of these schemes benefit from spreading misinformation and by pressuring investors with lies. Before investing anywhere, first, look up their claims and always ask for independent opinions. Be firm when you feel like someone trying to sell something to you seems sketchy, it is better to miss out on a “million-dollar opportunity” than losing your hard-earned money.
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