High Risk Financial Investment Scams
Author: Jorij
If a website offers you "risk-free prosperity", "financial freedom" and "secure profit" there is a serious chance that the company is a scam. The very simple truth is that there is no company that can promise you a high return with no risk. Every investment carries with it a certain level of risk. If this would not be the case, everybody would be investing in it. The Tortoise Mindset created the visual below mapping the level of risk with the kind of investment product.
As you can see, the investment types, such as cryptocurrencies and options, that are most commonly used by scammers, to lure investors promising tremendous returns actually carry the highest risk. There is no way these kinds of investments can be “risk-free”.
How to Check an Investment or Trading Company
Before you make the decision to invest, do the following checks:
What is the company trading/investing in? High return investments are usually high risk. Typical high-risk investment products are cryptocurrencies, oil, gold, foreign currencies, hedge funds, etc. If the company does not clearly list the assets in which it is investing or trading, do not invest.
What are your chances of losing money? Experienced trading and investment companies know what the chances are that you will lose (all) your money. For CFDs, the estimates are that 70% to 80% of all private investors lose their entire investment. If the company cannot state the likelihood of losing money, do not invest.
Don't trust welcome bonuses. Many scammers offer investors a "welcome bonus". The scam trick is that you cannot take your money out of the scheme or, to get the bonus without paying. It is easy for them to offer a bonus, knowing you will never get your money. If they are unclear about the conditions for the welcome bonus, do not invest.
Is the company certified? Scammers often show a company registration certification, often from the UK, to appear legitimate. However, this is not enough. In most countries, investment and trading companies have to be certified or licensed by financial regulatory authorities in order to legally offer their services. Do not trust the "proof" provided on the company website itself. On Scamadviser you can find a list of country authorities that license investment and trading companies. If they are not on the list, do not invest.
Finally, we recommend you to do your homework. Use our checklist "How to Recognize a Scam". It may also be worthwhile to read our articles about "High-Risk Asset Trading: Forex, CFD, Gold, Oil and More" and "What are High Yield Investment Programs (HYIPs)".
Sources:
https://tortoisemindset.com/2019/08/05/the-investment-risk-pyramid
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