Spotting An Investment Red Flag

Investing is an excellent way to increase your cash flow. However, to say that investing is 100% error proof would not be a valid or fair statement. The reality is that there are individuals who present investment opportunities to people with the sole purpose of stealing their money or causing some other type of harm. If you are new to the world of investments, this information is something you must keep in mind. Learn how you can spot fraud before you hand over your hard-earned money.


While it might sound trivial to rely on instinct, your inner feelings about a situation often seem to be your best guide. If a person is presenting you with an investment opportunity that sounds too good to be true, such as promising an immediate return far greater than your initial investment, more than likely the specifics of the investment are not true. The person could be lying altogether or over exaggerating. 

Little Information

Any person that is presenting an investment opportunity to you should be well versed on the matter. Always be leery if the individual doesn't have any information or is unwilling to research the information. In reality, the person might not even be attached to the company they are seeking investments for, which might explain their lack of knowledge. If you're in doubt, don't hesitate to walk away or at least contact the company they claim to represent to ensure their role is valid.

No Risk

Even an investor that has years of experience will tell you that there are no risk-free opportunities. If someone says you are guaranteed a return on your investment without any risks, what they are selling you is likely a scam. A professional advisor will always be upfront and honest with you and let you know what the risks are so that you are fully prepared and informed. 

Fast Action

Another red flag to look out for is an advisor that claims you have to invest right away, particularly if it's a significant investment. There are instances when an advisor will tell a client about an investment opportunity with a limited time window. However, the person has likely had a long-standing relationship with the client and knows that the investment opportunity would be something of interest to the person. A person that reaches out to you to tell you they need the money now, before you have a chance to research the opportunity, is sketchy.

If you have concerns about a large investment, a securities attorney can help. An attorney can research the specifics of any risky investment to ensure you are safeguarded.