Avoid getting scammed

The investment industry contain a lot of money and attract a lot of scammers. In this article we are going to look at what you can to avoid getting scammed.

Financial adviser vs fiduciary

The first thing you need to learn if you want to avoid getting scammed is to learn the difference between a financial adviser and a fiduciary. The difference between the two professions is huge. One can help you become more successful. The other should always be avoided and should not be trusted.

fiduciaryIt is very easy to think that a financial adviser is someone that knows a lot about trading and investing. Someone that you can turn to for help to improve your portfolio. Someone who looks at your situation and figures out how you can improve your portfolio to decrease risk and increase yield. This is not the case. A financial adviser is nothing more than a glorified salesperson. They do not have to consider what is best for you and often recommend bad products that that they get a high commission on. This is true even if you go to a big bank or brokerage firm and talk to a financial adviser. They usually have strict guidelines for which products they should sell to you.

The high commission and high profitability for the providers is why so many advisers recommend annuities. Annuities are in reality a poor investment that you should avoid. They are expensive and give a poor net return.

A fiduciary on the other hand is bound by law to put your interest first. They look at your financial situation and recommends what they genuinely think is the best option for your. They are not always right but at the very least they keep your interest in mind.

Always avoid financial advisers. You have tricked/scammed millions of Americans into buying financial products that where ill suited for their need and that gave them lower returns than they could have gotten elsewhere.

To good to be true

If something seems to good to be true than it usually is. Scammers feed on your greed and makes promises that are too good to be true to find suitable marks that is going to fall for their scams. Do not get scammed into investing in something that seems to good to be true and do not believe anyone who contact you and say that they have inside information that makes the profits possible. Anyone having insider info of this type will keep it to themselves. They will not cold call people to share it.

If you despite better knowing want to invest in something that seems to good to be true then you should make a small investment. Small enough that you can afford to lose it. Expect to lose it and be happy if you are wrong and make a large profit.

Learn how to calculate implied odds and use them to guide you to whether it is worth taking the risk or not.

Know what you invest in

It is very important to always research all investments and trades before you do them. Never invest in any asset or financial instrument that you do not understand 100%. It is not enough to read a quick guide online or to read the info on the brokers web page. You have to spend time to really learn how the investments you are considering really work. A large percentage of all investors and traders who feel that they have been scammed got “scammed” because they didn’t understand the instrument they where investing in. In many cases they didn’t really get scammed. They just made assumptions regarding how the investments work and felt scammed when they lost money and discovered that the investments didn’t work as they assumed. All this despite the fact that brokers provided information that explains how the investments really work.

By understanding how an investment work, and how they should be used, you can avoid getting scammed and avoid feeling scammed after you invested in things you did not understand.

Never deposit money by check

You should never deposit money to an investment account by mailing a check. This is especially true if you are sending money to a broker in another country. It is too easy for unscrupulous brokers to claim that they never received the check and that it got lost in the mail. There is also a very real risk that they really got stolen in the mail. There are many countries where it is easy to cash a stolen check because the ID controls are less strict and where it is easy to bribe some one at a bank to cash a check without ID.

Always deposit money using electronic methods that provides a evidence of your deposit and that don’t risk getting intercepted along the way.

Never deposit money using Western Union

Western Union is very popular among scammers since there is no way for you to retrieve your money once they have gotten their hands on them. Any broker or investment opportunity that ask you to deposit the money through western union should be avoided. They are very likely scams. Any legit individual will be happy to receive the money through another safer channel.

Learn about different types of scams

There are very few new scams in the market. Almost all scams are old scams or new version of old scams. By learning about different scams you can avoid getting scammed and learn how to identify a scam before it costs you money. The more you know about scams the more likely you are to be able to spot a new scam even if it one you never heard about before.