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Investing is one of the best ways to create the future of your wealth and your financial position.
However, it is not a step that should be taken lightly because not all the investment vehicles are created equal. Some of them may be frauds and some may involve high risks. The following are the eight important flags that should be watched for when choosing investment opportunities as provided by this article.
1. Promises of High Returns with Low Risk
A major warning sign should be an investment that is promising high returns with low risk. It is only human to be attracted to the offers that seem to be almost too good to pass up, but note that high returns are usually accompanied by high risks. For example, a service that offers a guaranteed return of 20% every month without risk is a huge flag. Such results are improbable without putting a lot of money at risk.
2. Lack of Regulation or Licensing
Another cause for concern is the presence of unregulated or improperly regulated investment products. Most good investment opportunities are usually regulated by various government authorities or other financial services providers. It is important to know whether the opportunity is approved by the relevant authorities; if not, it is probably wise to avoid it.
3. Pressure to Invest Immediately
Stay away from the situations which make you feel that you are being forced to invest right away. These are typically the sort of ploys that con artists like to use in order to create a sense of urgency. A good investment should give you enough time to think things through and do some more research before making up your mind. If you feel rushed, that’s a major red flag.
4. Lack of Transparency
Transparency is very important in investment dealings. It is also a sign that an opportunity is not well thought out if it does not have a clear and well-defined plan of action. In order for a venture to be considered legitimate, one has to be able to identify the company, those who run the company, how the company intends to invest your money and the risks that are involved. If you have a number of questions that you are unable to get answers to or if the information that you are being given is very general, then you should be worried.
5. Unregistered or Unqualified Salespeople
Watch closely who is advertising the investment product. Most of the legitimate investments are usually made by qualified and registered persons who have the right licenses. Therefore, if the sales rep is not qualified or not registered, they may not be in a position to provide you with the right information.
6. No track record or historical returns.
It is always crucial to check on the historical returns of any investment before making the actual investment. Reputable investment products should be able to prove their past performance. If they cannot give you this information, that is a big problem; you have every right to know how they have fared in the past to ensure they are in sync with your investment objectives.
7. Complex or Obscure Investment Structures.
It is advised that you avoid investing in projects that have a very complicated or ambiguous structure. Normal and honest ventures should be based on rather simple and easy to understand plans. It is also questionable if there is a lot of jargon or if the person trying to explain something cannot do it simply. You should always know how your money will be used and what risks are involved before deciding to invest.
8. There are reviews or reports of negative experiences.
It is advisable to find out more about the investment you are about to make by reading what other people have to say about it. There is a wealth of information on the internet that can reveal the opinion of other investors. If you get a lot of negative comments it is advised that you act on the concerns that have been raised as they can be detrimental to your investment.
Conclusion
It is very important to be careful when choosing investment opportunities as this will go a long way to affecting your financial future. If you know these eight flags, you will be in a better position to avoid the scams and the investments that have more risk than return. Note down the following points that will help you avoid excessive promises, no regulations, force, lack of transparency, unqualified persons, no history, complex structure, and negative feedback. It is always better to research on your own, or if needed, seek the opinion of professionals and stay aware. Knowledge is power and with the right information, you can go into investment decision making and ultimately achieve your financial goals.
