In previous articles, I’ve discussed how to spot the warning signs of investment scams. Here, I’m going to delve a little deeper and break down for you in the simplest terms what some of the most common investment scams like and how to tell if you’re being set-up.
Sadly, fraudulent scamsters make it very difficult for legitimately professional financial advisors like myself and my colleagues. There are pitfalls in the world of finance and if you want to avoid getting cheated out of your hard-earned money, there are things you need to know if you intend to be on your guard. A trusted financial advisor can be a crucial asset in navigating the world of scamsters and how to spot them.
Cold calls / boiler rooms
While cold call scams and boiler room scams are not necessarily always the same thing, you should definitely be aware of both. Sometimes people receive unsolicited phone calls from people who purport to have the investment opportunity of a lifetime. As the old adage goes- ‘if it sounds too good to be true, it probably is’. These people are usually calling you from what is commonly referred to as ‘boiler rooms’. The scams they perpetuate are sometimes known as ‘fly-by-night’ scams. Here today, gone tomorrow.
These boiler room scams can be quite elaborate and sophisticated with all the trimmings and optics of legitimate financial business enterprises. This illusion, of course, is a necessary part of the scam, being that cold-calling is automatically suspect. These scamsters will generally provide everything from fancy brochures to well-pedicured websites in order to dazzle you with the veil of respectability and legitimacy, only to disappear with your money once they’ve gained your trust, leaving you whirling in the breeze unsure of what just hit you.
Precious metals and coins investments
We all hear time and time again that precious metals like silver and gold are a sure thing when it comes to sound investments. Generally speaking, this is very much the case. Unless, however, the offer comes up out of the blue from a trader or dealer you are wholly unacquainted with or an individual that is hyping up an unusual or highly specific type of precious metal in an unorthodox form. For example, “XY coins and bullion”, etc. This should be a red flag that you may be dealing with a scamster.
While it is true that precious metals are an asset class of high value, it’s imperative that investors do their due diligence to ensure they’re actually getting what they pay for. With precious metal scams, the victims will more often than not find themselves with cheap, plated coins, or even worse- absolute squat. You’ve lost most, if not all of your money and you don’t realize it until the scamster is long gone.
Fraudulent offshore investment schemes
Make no mistake, investing offshore is a perfectly legitimate option. However, scammers prey on the fact that the average target is unfamiliar with the benefits and structures of offshore investments. If avoiding taxes and the idea of profiting from tax avoidance is their primary selling point, you should definitely be on alert, and you should certainly get a second opinion from a trusted financial consultant. Helping investors like yourself spot shady agents is part of what I do for a living, and I do it well.
Free stock tips
Commonly referred to a “pump-and-dump” scams, these are not dissimilar to the cold-call/boiler room scam.
As opposed to outright making off with your money, this variation involves someone claiming to have an amazing opportunity or insider knowledge on a specific stock.
It looks innocuous enough, because they may tell you that you don’t even need to buy through them. They will likely tell you that they are sharing this info with you so that you can make money too. They will likely come off as really nice people trying to help out fellow investors.
Don’t be fooled. 9 times out of 10 they have a huge cash stake in these undervalued stocks and may even be part of the launching of the stock or cryptocurrency to begin with. If they can con you into investing into the stock they are launching, the price of that stock will skyrocket, the scammers involved in launching it will pull out immediately and disappear like thieves in the night, the value of the stock will nose-dive and you will be stuck with an utterly worthless stock.
Don’t get scammed. When considering stock tips, precious metals, offshore investing etc., it really is a sound decision to consult with a reputable financial advisor. The alternative could be financially catastrophic.
Richard Meyer Cayne has helped many High Net Worth Families with issues such as wealth accumulation, succession planning as well as overall portfolio construction and management using modern portfolio theory. Richard Cayne has helped from both very basic beginner portfolios to advanced extensive portfolios and has assisted thousands of Japanese accomplish their financial planning goals and objectives. Richard continues to try and make a difference in his client’s lives and always encourages his clients to discuss their family’s finances with their children in the hopes of getting them involved in understanding how the family can preserve and grow its wealth and contribute new ideas towards the common goals of the family.
In 2010 The Meyer Group was acquired by Asia Wealth Group Holdings Ltd listed on London’s AQUIS Stock Exchange
