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Recognising Investment Scams: Red Flags Every Australian Should Be Aware Of

Investment scams pose a significant threat to individuals’ financial security, and recognising the warning signs is essential for protecting yourself and your hard-earned money.

In this guide, we’ll explore some common red flags that can help you identify potential scams and avoid falling victim to fraudulent schemes.

If It Sounds Too Good to Be True, It Probably Is

It’s an age-old adage, but it’s true.

Be wary of investment opportunities promising exceptionally high returns with little to no risk. While everyone wants to make money, legitimate investments come with risks, and overly optimistic claims may indicate a scam.

Be Sceptical of Promised “Guaranteed” Returns

Investment returns are never guaranteed, and anyone who claims otherwise is likely not being truthful. Scammers often use the lure of guaranteed profits to attract unsuspecting investors, so always exercise caution and perform thorough research.

This is particularly the case when dealing with a higher rate of return investments. Growth assets, such as shares and property, can be very volatile in the short term.

Secrets Are Rarely Legitimate Investments

Legitimate investment opportunities should be transparent and open for discussion. If someone tries to keep their investment scheme a secret or discourages you from seeking advice from others, it could be a sign of a scam.

In other words, you’re being told to keep your “investment opportunity” a secret because the scammer doesn’t want friends or family telling you to divest.

Don’t Succumb to High-Pressure Sales Tactics

Scammers often use urgency and pressure to push individuals into making quick decisions without proper consideration. Take your time to evaluate any investment opportunity, and don’t be afraid to walk away if you feel rushed or pressured.

Investment scammers love to take advantage of your FOMO (Fear Of Missing Out). This is why Ponzi schemes and MLMs can be so effective; they tap into our desire to “keep up” with our acquaintances.

Stay Vigilant

Remember, protecting your financial well-being requires vigilance and scepticism. By staying informed and recognising these red flags, you can avoid falling victim to financial scams and make more informed investment decisions.

Secure your financial future today!