Investment Scams: What To Look Out For


This year the number of investment scams has quadrupled – a huge increase which means that we all need to have our guard up against too-good-to-be-true offers and dodgy websites.

The Investment Association have warned that scammers have become smarter with their tactics; instead of badly worded emails asking for your life savings, they are cloning fund managers’ websites and creating false comparison sites to lure people in with attractive investment opportunities.

Research sites beforehand

Don’t use a comparison site to find your investment opportunities unless you can be sure of its reputation. Use forums as well as review sites to check on the experience of others before parting with any cash.

You can also search company names on the Financial Conduct Authority website. Take a look at this listing for the ‘bond comparison site’. It clearly explains that the company is not authorised, and lays out the associated risks. You should be able to find similar information about other scam websites – although be aware that not every website will be listed.

Look for recommendations

On the flip side of researching bad companies, you can also use the online investment community to look for genuine investment opportunities. Read up on the investments that other people have made, the companies that they’ve had positive interactions with. These recommendations could be much more reliable than the result of your Google search.

Look out for too good to be true offers

Although insurance scams are often harder to spot than other types of fraud, they may still try to lure you in with exaggerated claims about how much money you can expect to make. Anyone who offers guaranteed returns, or who tells you that you can quickly increase your money to several times its current value is certainly lying. A reputable company will explain that your capital is always at risk when investing, and that investment is a long-term financial strategy not a get rich quick scheme.

Don’t make spur of the moment decisions

Scammers will often encourage you to invest your money as quickly as possible, before you’ve had an opportunity to really consider their offer carefully. Any sort of high pressure sales tactic should be seen as a red flag. Always give yourself time to sleep on the decision,: and to do the research suggested above.

Get independent investment advice

One group that is particularly vulnerable to this kind of scam is people who have recently come into some wealth. There are also those who decide to invest their life savings. In either case, if investment is unusual for you and you’re not sure where to start then it may be sensible to speak to an independent adviser. Some banks will also offer advice to customers.

This is a good idea even if you’re not worried about falling prey to a scam, as an advisor can also help you to make smart investment decisions. Investment can be a fine art, and even those who have been investing for years can find themselves losing money after one bad decision. If you’re planning to invest a sizeable sum then you should always speak to a professional first.


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