Bad investment schemes to avoid

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In the volatile market, consumers are always on the brink to lose money. In fact, frauds can disturb the best retirement plan and clear away savings that have been accumulated for years. So, if you aren’t aware of scams, then it’s time to keep a watch on different kinds of investments that have been compiled below.

Promissory notes
A promissory note is nothing but a debt that’s very much similar to a loan or IOU. While the individual is enticed to take a loan, the company in return promises that they would be paid on the basis of a fixed return on the investment. Typically, the promise relates to paying back the principal along with the annual interest. As these are perceived as legitimate investments, these are much more than worthless paper. The case is different with promissory notes because many companies have a relationship with financial institutions when it comes to borrowing money.

High-return investments
Known as risk-free investments, high-return investment schemes entice customers to purchase products that don’t meet the investment objectives. The recommendations might be quite weird when the broker decides to sell options like futures and options or penny stocks. Usually, such a type of opportunity might seem good but ultimately you may never know when you would have to face the loss.

Financial predators
In today’s era, financial predators might appear in every other way. It could be defined as someone who persuades a person to purchase products which are simply not affordable. If you’re thinking about who can be a financial predator, then it could either be a car salesman, mortgage broker, insurance broker or a financial advisor. In the end, those so-called professionals forget ethics and try to gain more once the person has decided to invest.

Internet investment fraud
Synonymous to frauds over the phone or through an email, internet investment frauds are something that has been increasing over a period of time. As fraudsters use plenty of tools such as bulletin boards, chat rooms and online newsletters to broadcast fall promises, they may also get a website designed by an experienced person. With the objective of enhancing the online presence, the individual would find a sure shot way to make the scam seem legitimate. Through the years, the internet has helped to implement the off shore scams which are tough to regulate. 

Affinity fraud
This fraud is associated with investment scams when religious and ethnic communities are targeted in a different way. Deceivers who are involved in the scams often seem to be members of the group. Once the religious leaders and the communities are enlisted, it’s never too difficult to convince people that it’s worth to make an investment. Most of the time, the leaders themselves have to repent once they become victims to the scheme.

Ponzi schemes
Named after Charles Ponzi who fooled numerous England residents, Ponzi Schemes has always been proved illegal. The individual thought that he would benefit to pan money so that international mail coupons can be purchased. He convinced investors that he would pay 40 percent returns within three months. Eventually, the people were delighted because they knew that they would obtain much more than 5 percent from the savings in the bank. But, after a certain time span, the investigation revealed that Charles had only bought $30 worth international mail coupons. Nowadays, such schemes simply follow a principle of robbing a person and then crediting the money into someone else’s account. The objective was to pay investors money that was procured from ones who have just joined the network.

Pyramid schemes
In this scheme, fraudsters promise high returns in a short period. The money is obtained only when the person is lured to invest in products that can be appropriate for their lifestyles. Moreover, they would be also paid when they enroll their acquaintances just for the sake of growing the network. In the long run, as the pyramid starts developing, the promoter fails to raise money so that the earlier investors are paid in every way. The entire scheme then collapses and people are bound to earn in addition to the salary they have been drawing.

On a concluding note, no one is going to aim a gun on your head and force you to day ‘yes’. If there’s something fishy in what you would engage yourself, then it’s your decision to say ‘no’. You can always refrain from checking emails by filtering them in the best possible way. Once someone speaks that you would become rich in no time, then you should immediately recognize that you would be dealing with a fraudster. Much before anything happens, you should discuss your goals with the advisor and see to it that the expectations are written on paper. Never lend money to win and be bound to promise to earn lots of money.







Bad investment schemes to avoid Bad investment schemes to avoid Reviewed by sidex Jay on January 23, 2018 Rating: 5

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