This is a quick rundown of tricks to help you discern if an investment scheme is a scam or not. For a more detailed article, read: The Financial Scam's Anatomy.
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Low Risk – High Reward
- When you see something like "50% Return of Investment in just _______"
Quick Turnaround Time
- When you see something like "_______% Return of Investment in just 6 weeks"
Talk of the Town
- When everyone is talking about it except the business section of the newspaper.
The Financial Statements
- Numbers don't lie. If the numbers don't add up of how a firm's income generating means (Assets) can provide such revenue to its many investors, which is practically an expense (Liability).
Number of Members
- If their numbers increases exponentially in a short amount of time.
Even with the red flags flying around, we still get victimized by scams. The main enemy here is our own curiosity. Even if we are provided with the information we need to steer clear to an investment scheme. Sometimes, we still go in to experience it firsthand. Yes, experience is the best teacher, but do yourself a favor and don't apply the principle when it comes to financial scams.
"A little knowledge is a dangerous thing. So is a lot."
Albert Einstein
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- Your Life In Perspective by Ælfræd "Elf Counsel"
