Over £1.2 billion a year is lost to fake investments. Investment scams can be difficult to identify due to ever-more sophisticated and knowledgeable fraudsters. It is easy to get caught up in the hype of investments but sometimes it may not be as genuine as it seems. Here at Acumen, we have compiled some information to help you distinguish the real from the fake, helping you to become a ScamSmart investor.
Don’t trust cold calls
Most commonly, scammers entice investors by cold calling, offering information and eventually asking for small amounts of money. They will continue the ruse until you believe that your profits are growing and start to invest larger sums of money. Cold or unsolicited callers are often unregulated, meaning the investments on offer are high risk scams.
Cold calling is one of the most common ways for scammers to entice investors and the best thing to do in this situation is to hang up. It is very unlikely that any worthwhile opportunity will arise from a situation like this one. If you do find yourself intrigued by the offer, make sure you do your research. A simple search could provide enough information to deter you from investing in a particular product or service and save you thousands of pounds.
If the investment has negative reviews or little information online, chances are the proposal will be a scam. It is also worthwhile checking the Financial Conduct Authority’s (FCA) warning list, which provides information on any investments that should be avoided. The FCA is the regulator for 56,000 financial service firms and financial markets in the UK, making it a trustworthy option.
Impartial financial advice
The safest way to protect yourself from a risky investment is to seek impartial advice from a professional investment manager who will be able to decipher the risk attached with an investment and advise you of alternative options. You can approach a financial advisor who can recommend the best investments depending on your circumstances. They will help you to distinguish your aims and attitudes, balanced against the risks of potential investments.
There are a number of different investment options available out there and investment managers will be able to tell you the ones that are most likely scams. If you are thinking of investing in a particular service or product, you can take any paperwork with you to see a financial advisor and they can answer any questions you may have without bias.
Know your investments
Some investments may not be illegal but they can carry a high risk. You may receive large pay outs, however there is also a risk that you could lose more money than you started with. Before investing any money, it is important that you understand your investment and the risks associated with it.
Here are some of the investments with the highest risk:
- Structured products.
- Venture Capital Trusts (VCTs).
- Spread betting.
- Contracts for Difference (CFDs).
- Land banking.
- Unregulated collective investment schemes (UCIS).
Take your time
If you feel pressured or rushed into making a decision about an investment, then chances are it isn’t right. You need to take your time, read over paperwork and ask any questions you might have. Make sure you have all the information you need before deciding to invest your hard-earned money.
Acumen are experienced financial advisors and will be able to answer all your questions regarding investments. If you wish to receive impartial advice, speak to one of our advisors today by calling 0151 520 4353 or email firstname.lastname@example.org. We will be happy to help.