People save their hard earned money and make investments so that their money can work for them and they can have a nice nest egg for when they need it most. But millions of people all over the world are swindled out of their savings, sometimes even their complete life savings, due to investment fraud. Here is a look at some of the common types of investment fraud and what you can do to protect yourself from it.
Types of Investment Fraud
1) Securities Investment Fraud: Investing in securities is a leading option for people looking to invest their money. Many kinds of stocks, bonds, gas and oil leases, etc. are available for those who want to make some money from securities. Due to the ever increasing investments in securities, this type of investment fraud has also become very rampant. Some brokers encourage people to invest in stock of start-up companies with promises of huge gains. But whereas the broker gets his commission the investor ends up losing his money to these bogus stocks. Some brokers also use the money of their clients for speculation, and when that fails, the ultimate loser is the investor. Thus it is important to be very careful when investing in securities.
2) Business Investment Fraud: Sometimes people with some excess money on their hands look to a business opportunity to invest that money for monetary gains. Such opportunities include buying an existing business or taking a franchise of some business. Although most times such opportunities are legitimate, there are some which are not. Nowadays there are a lot of distributorships and home based business opportunities that claim to give you immense profits for little work and no risk. With such promises, people ask for some investment in the business and then disappear without any trace, along with your money.
3) Double-Your-Money Investment Frauds: Schemes for ‘doubling’ your money in quick time are attracting a lot of investors. In such schemes, the investors are given double returns for their investment in the initial period. When you start to trust the scheme and invest a huge amount of money in it, the fraudsters make off with your money and you are often left with nothing.
How to Avoid Investment Fraud
In today’s day and age when investment fraud has become very common, it is important that you know how to protect yourself and your hard earned money from fraudulent investments. Here are some tips to help you avoid investment fraud:
Unfortunately, you can be a victim of investment fraud, even if you take all the necessary precautions. So the wisest thing to do with keeping this in mind – Don’t put all your eggs in one basket; invest only that much money in any one scheme that you can afford to lose.