4. Investment Opportunity Scam
Investment scams are rampant, and the identity of the victims may surprise you: they’re typically smart, wealthy men over 40 (most are even older).
Whether it’s because they’ve successfully taken risks in the past or just that they now have enough money that they’re not always cautious, experts say victims may be losing up to $50 billion every year.
And, since a lot of victims are too embarrassed to admit they’ve been scammed, the number may actually be a lot higher.
The secret to avoiding investment scams can be summed up in the old adage, “If it sounds too good to be true, it probably is.” That starts with a basic understanding of financial fundamentals, including what a reasonable rate of return is.
For the 10-year period ending December 31, 2013, the average investor had an annualized return of 2.6 percent. So an investment that “guarantees” a return of at least 50 percent is likely to be a scam.
But it’s a good idea to do independent research before making any investment. Experts advise being particularly cautious of investment recommendations that come from friends and family members. They may not be trying to scam you, but they could certainly be victims themselves.