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How to spot a sophisticated investment scam

4 September 2019 3:33 PM
Tags:
Fraud
Investment
The Money Show
Ponzi scheme
Pyramid schemes
Bruce Whitfield
Scam
Investment Scam
Pyramid scheme
Personal finance
Financial Services Board
419 scam
investing
INVEST
personal finances
fsb
pyramid
ponzi
pump and dump
Scams range from crude and clumsy to the highly polished. Bruce Whitfield interviews personal finance expert Warren Ingram.

Some investment scams are crude.

Others have an air of legitimacy.

The Money Show’s Bruce Whitfield asked personal finance expert Warren Ingram how to tell if what you’re being offered is truly an amazing investment or merely a scam.

If it’s too good to be true… (you know the rest)

An investment in shares is the most lucrative one you can make over the long-term. For the last 114 years, the South African stock market gave you up to 15% a year. So, you need to ask some serious questions if anything guarantees you more than that.

Warren Ingram, Personal Financial Advisor - Galileo Capital

How on earth can anything give you a linear return that’s way more than what the market offers? If they do then you’re taking way more risk than you think to secure that guaranteed return. Prepare to lose money.

Warren Ingram, Personal Financial Advisor - Galileo Capital

3 warning signs that it’s a scam:

  • Exclusive investments (i.e. offered to only a few people)

  • Any pitch that creates urgency (e.g. “For a limited time only!” or “Invest now before it’s too late!”)

  • Any investment that’s not regulated with the Financial Services Board (you need to see the proof)

Ingram warned against the five most prevalent investment scams:

1. Off the book deals

If it’s off the books it’s almost certainly a scam.

2. Ponzi schemes

Money from new investors provides returns for earlier investors.

3. Affinity fraud

Fraudsters dupe esteemed members of society with an “investment” opportunity, leading others to be less critical than they would otherwise have been.

4. Unlicensed individuals selling securities

If the broker is not licenced; don’t deal with him.

5. Pump and dump schemes

Investors with inside information buy a share, then recommend it to others, resulting in the share price rising.

Once the price goes up, they dump their stock, sending the price down.

For more detail, listen to the interview in the audio below.

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This article first appeared on 702 : How to spot a sophisticated investment scam


4 September 2019 3:33 PM
Tags:
Fraud
Investment
The Money Show
Ponzi scheme
Pyramid schemes
Bruce Whitfield
Scam
Investment Scam
Pyramid scheme
Personal finance
Financial Services Board
419 scam
investing
INVEST
personal finances
fsb
pyramid
ponzi
pump and dump

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