Tips for Avoiding Investment Fraud

Tips for Avoiding Investment Fraud

 Raising a family isn’t easy on your bank account. No matter if your child is in diapers, just starting preschool or about to head off for college, you might find yourself feeling stretched financially, which can make you more than a bit nervous about your financial future. While an insurance agency can help you maintain your financial health, investing can help you improve your financial health. That being said, you’ve got to be careful about how you invest and whom you invest with as well.

 

Ask Questions

 Simply asking questions could be just enough to spot a scam. In addition to asking for additional information from anyone who approaches you with an investment opportunity, do some independent research on your own. This is because fraudsters can offer up false or outdated information. Specifically, turn to the U.S. Securities and Exchange Commission for answers and additional details.

Excessive Returns

 When it comes to the stock market, you can expect more than a bit of volatility. If your investment brings in consistent returns over a long period of time, while it might seem great, it should also bring up some serious red flags. One of the features of the stock market is that it goes through periods of ups and downs, so if your investment brings in nothing but ups and gains with no losses, you might want to see just what’s going on behind the scenes to figure out what's triggering your good luck.

Have or Form a Relationship With the Salesperson

 Even if you know the person bringing the investment to your door, do some investigating anyway. There’s a chance she or he could be getting duped and you’re both being taken advantage of. For instance, find out whether the salesperson has a license to offer securities in your state by contacting your state securities regulator. You can also investigate the salesperson’s professional background online through FINRA’s and the SEC’s databases.

Use Third-Party Asset Verification

 If it’s your financial advisor who brings you an investment tip, do yourself a favor and use third-party asset verification when you receive your account statements. While you might trust your financial advisor, there’s a chance she or he is being duped, which means you’re being duped. With third-party asset verification, a third party has your funds and sends reports to you as well as to the IRS.

Investing is a great use of your money and time, no matter if you have a family. Always do your due diligence before pulling the trigger, otherwise, you might be sending a bullet directly into the heart of your financial future.