Markets are rallying, we are out of the recession and you as an investor are eager to continue with your investing plan…great! This is a perfect time to create a new investment scams and take advantage of overlay eager investors. You do not need to be a novice investor to fall pray to investment scams even experienced and smart investors can become victims of investment scams if not careful. Unfortunately there is no easy way of knowing if an opportunity is a scam, however there are a few steps an investor can take to reduce chances of falling victim to investment scams.

Watch Out!

Watch Out!

Hot Tip From Stranger
You were lucky enough to get this hot investment tip! Maybe not so lucky when you find out it was a scam and you lost all your money. Never consider or rely on a hot investment tip especially one you get from a stranger, remember people are greedy why would someone share this with you if don’t benefit from it?

Easy Fast Money With Little Risk
If there was an easy and quick way to become rich, trust me I would not be sitting here nor would you be reading this. Unfortunately nobody has yet found the magic get rich quick scheme, if you are told this is a easy way to make money rest assured the only thing that is easy is losing money.

Pressure “Act NOW or it will be too late”
The all infamous “BUY NOW BEFORE IT’S TOO LATE” speech, if the investment is a good opportunity today it will remain a good investment for the next few days. You should never purchase an investment because you are pressured into it, if you sense pressure get up and walk away. Always allow at least two days to think about it and do some research.

Unless you are discussing segregated funds or GIC/CD run away as soon as you are told the investment is guaranteed! No investment can be guaranteed. There should be a big alarm going off in your head as soon as you are told that the investment guarantees a certain rate of return or even your principle.

No Prospectus or Financial Documents Available
Ask for a Prospectus and financial statements, if they cannot be provided walk out. Every legitimate investment opportunity needs to have audited financial documents available for review, if you these cannot be provided to you then chances are that it is a scam. Note that even if financial documents have been made available it does not mean that the investment opportunity is legitimate, you should do your due diligence.

Related Topics:
Successful Investing: 10 Tips for Successful Investing
Investing and Money Rules of Thumb

Do you have any tips? Ever fallen victim to an investment scam? Have you ever been approached?