Red flags to watch for when investing

Financial fraudsters are getting innovative by the day, however with this format you can be steps ahead of them.  

Check their registration status.

As a matter of fact, all brokers, fund managers and investment advisers are required by law to register and get statutory licence from the Securities and Exchange Commission. It is very necessary that your fund manager be captured in the SEC database. This is to give you a platform to seek redress if you're not treated fairly by your fund manager. The SEC as a regulatory body also ensure that your money manager is a professional in the field of money management. Always visit the SEC  website and check if the fund being marketed to you is registered with the SEC. It would save you from "premium tears" thereafter.

 
Be skeptical of investment pitches that guarantee a certain spectacular return.

Truth be told apart from government backed securities such as treasury bills (or some short term money market instruments), there is no financial investment products that can give you guaranteed returns. Returns on financial investments are subject to some forces like interest rates, forex fluctuations, boom and burst cycle, political turmoil, and so on and so forth. These factors make financial investments a game of probabilities. So whenever a salesperson is telling you about a guaranteed return, you're about to part ways with your money.

Ignore the "everyone is doing it" story.

Don't believe claims that "everyone" is on the deal. There's this thing I noticed about human psychology. Human beings are wired to seek validation from social circles. They feel comfortable about what they want to do once there are other people within their social group that are doing the same thing. That is exactly how ponzi scheme thrive. Those fraudulent fund managers are experts in human psychology. Be wary of a sales pitch that focuses on how many people are investing, without telling you why the investment is sound.

Check for inconsistency. Have you been told to invest in a company's fund, then you discover that their account details bears the name of an entirely different company. Or at some points, you realize that the identity of their operators are changing. Once you notice inconsistency, it's time to pull out of the deal.

Don't be rushed.

If the salesperson tells you that the investment opportunities are limited, consider it a red flag. A legit investment will still be there tomorrow. 

Don't let your guards down, arm yourself with information. Safeguard your money by learning how to spot red flags.