Investments Too Good To Be True

I have a family member who was taken in by a con artist.  Actually, it was a group of con artists.  It was a very slick, smooth, and quick con that took advantage of my family member’s preconceived notions about the investment world.  They lied about their investment opportunities and ended up taking a lot of money from many different people.  Unfortunately, because these con artists were from another country and the people who were conned feel quite embarrassed about the situation, no-one has ever been prosecuted.  Some victims, in fact, still believe in the con artists and insist that the investment is growing and will pay off any day now.  Pretty sad, and I just hope they aren’t still giving the crooks money out of incredibly misplaced faith.

I shared the above because I want to emphasize one thing:  If it seems too good to be true, it probably is.  Now, I have to say that there are many investment opportunities out there, from investing in large corporations, to buying into a business, to helping fund private investment firms.  However, there are many crooks that are quite willing to take your money, and they are very good at it.  The following are a few of the things you will want to think about before trying to invest your hard earned money:

1. How much risk is there?  Are they up front about risk?  Every investment has risk.  If they are saying that there is no risk or even low risk, you will want to ask questions about how risk is minimized and still provides the returns they are talking about.  Ask lost of questions about this, as you are putting your money at risk in their project.
2. This opportunity will be gone soon.  Con artists want to get in and out, so they push people to invest quickly.  They say things like “It’s a limited time offer,” “If you don’t do investnow, Dave down the road is willing to make money,” or “We only want 12 partners on this project, and I  thought you were really our kind of guy(or woman).”  If you feel pressured to make a decision fast, don’t.
3. What do other sources say?  Do internet searches about their product, company, even the names of the salesmen themselves.  If the opportunity is really that great, there should be someone who has spoken or written about the chance to make money in this area.  Does the company have a website that explains clearly what they do and how they make money, or does it stress attending a meeting or seminar (often at a fee)?  Are the owners’/managers’ pictures and names on the site?  A simple thing to look at is how many exclamation points they use on the site.  Do they offer facts and supportable data or just testimonials?  If the investment is based on a secret or conspiracy, be aware that you will not be able to verify what they are saying, which is a big red flag for fraud.
4. Do they talk about specifics?  How will they make money?  Where and with whom?  Who are the customers?  They need to answer all of these, clearly.  If they gloss over everything, giving only vague answers, I would be concerned.
5. Get it in writing.  Do they hand out brochures or written material, or is it all verbal and part of a visual presentation?  You want written proof of what they are talking about, and not just testimonials either.  If they aren’t willing to give handouts with facts about the investment, then I would avoid the company.
6. How can you sell your investment?  They should be able to explain how you can cash out if you no longer want to be involved.  Are there penalties or fees involved?  Is there a minimum amount of time you have to keep your investment?

I hope that no-one will ever lose money to a con artist, but the reality is that they are around and they take a lot of money from a lot of people.  Feel free to share the above questions with your friends or family.  I really don’t want anyone to have to suffer through losing their savings to a crook ever again.  Jerry