High Risk Investment Scams

Quite understandably, people want the highest possible return from their investments. But as a general rule, the higher the return, the greater the risk of the investment – you could gain a lot or lose everything. There are plenty of investment scams – frauds, really – that seem to offer investors a high return at very little risk, often in stocks or other areas, but all they really do is take your money.

How The Investment Scam Works

The investment tip could come as a recommendation from someone you vaguely know. It might also be in a spam e-mail (which should be a warning sign), since Internet fraud is very common. However it arrives, the promise is the same – for the investment of a fairly large sum of money, generally in the five-figure range, you can make a very high return with just a small amount of risk.

The scam is designed to appeal to the greed within people, the chance to make a lot of money quickly. It might be in the form of Bank Guarantees from a bank elsewhere in the world; in fact, the investment will always be offshore, meaning you can avoid paying UK tax on the amount – another incentive to invest in the scam.

It could also be a tip on a stock about to launch which is “guaranteed” to go through the roof. Inevitably, the language will be quite technical, but with an emphasis that stands out on the return on the investment.

Like other investors, you might be convinced, send off your cheque, and take comfort in the statements when they arrive each quarter. However, it’s all a fraud, a scam. The statements are pure fiction, and the money has vanished into the scammers’ bank accounts, as you’ll discover when you try to get to your money.

How To Avoid Being A High-Risk Investment Victim

The best way to avoid being a victim of this fraud is to simply not believe everything you read, especially if it originates online. Internet fraud is far more common than genuine Internet investment opportunity.

If, for some reason, you see merit in the scheme, investigate the investment. Do your homework thoroughly, finding out about the company behind it (if they don’t have a landline number or street address, walk away immediately, because it’s certainly a fraud). Exactly how does your investment earn its return, and what are the risks involved – they’ll certainly be bigger than the claims made to you.

Be cynical. Until proven otherwise, believe it’s an investment scam. Be certain it’s all legal, and check on your tax position regarding the investment. Always remember that there’s no such thing as a guaranteed high return on a high risk investment, and anyone who claims otherwise is almost certainly perpetrating fraud.

One sign of a scam is pressure to sign the necessary papers being given on you. Don’t give in to it! Have everything assessed by a financial professional, or someone who’s familiar with the field before you put pen to paper.

Ultimately, the odds are that anything that promises a lot for a little is a scam. Investment scams, especially those with Internet fraud, which offers a lot of anonymity. There’s never a shortage of greedy investors, many of whom are gullible enough to fall for the scam.