3 Tips to Avoid Investment Scams and Financial Fraudsters
When considering how to maximize our financial well-being, we’re often thinking about the good things financial health can deliver—like providing for our families, giving more to charities, and securing a fulfilling retirement. But it can be just as important to avoid the bad! This includes being vigilant about financial security and avoiding those who might try to cause us financial harm.
Unfortunately, financial scams and frauds are aplenty in today’s world. This can be especially true during the summer months, as scammers know many folks have recently retired and may have started spending their hard-earned savings.
Whether you’re a seasoned saver and investor or just beginning your retirement journey, these tips will help you make safer, more informed decisions.
#1: Be a thoughtful digital consumer.
In this digital age, most of investment and savings accounts are accessed through a website or mobile app. When managing your investments online, it’s crucial to be aware of cybersecurity best practices—and to follow them. It’s always smart to be a cautious digital consumer, but it’s even more important when money is involved! Here’s another recent Dimensions article highlights some tips for preventing cybercrimes, protecting your passwords and avoiding being the victim of hackers.
#2: If it sounds too good to be true, it probably is.
It’s not uncommon for scammers and fraudsters to hide behind promises of plentiful, low-risk investments—opportunities that are “guaranteed” to beat the stock market or U.S. Treasury bonds with no risk of loss. According to asset management giant BlackRock, the best-performing major asset class over the past 10 years is U.S. equities (stocks), which have returned 12.3% per year, on average. Be wary of anyone who is promising 30%, 50% or even 100%+ annual returns. There is usually a catch!
#3: There’s no such thing as a free lunch.
Another form of financial scam might sound like an offer for “free” investment products or services. Take caution whenever you’re offered anything for free that typically costs something. There are plenty of legitimate special offers and services offered at no additional cost, but be prepared to ask for full transparency on all fees and expenses associated with every investment opportunity.
To protect your financial well-being, it’s imperative to always be on the lookout for bad actors. By keeping these tips in mind, you’ll be better prepared next time you are targeted by potential scams or frauds.
