Most investing scams have some common warning signs that are fairly easy to spot. Before you invest, ask yourself these questions:
1. Were you promised a high return on a low-risk investment?
One of the first rules of investing is that higher return equals higher risk. In other words, the more money you can potentially make on an investment, the higher the risk of losing some or all of your investment.
2. Did you have enough time to make a decision?
You should never feel pressured into buying an investment on the spot. If you hear things like “act fast,” “one-time opportunity” or “buy now before it’s too late,” the person you’re talking to likely has something to hide.
3. Were you given confidential or “inside” information?
A scam artist may claim to have information that nobody else knows about a company. You have no way of knowing if this “inside” information is true. And even if it is, trading on inside information is illegal in Canada.
4. Can you verify the investment with a credible source?
If you receive an unsolicited investment opportunity, get a second opinion from your registered financial adviser, lawyer or accountant.
5. Is the person who contacted you registered?
Anyone who tries to sell you an investment or give you investment advice must be registered unless they have an exemption. You can contact the Nova Scotia Securities Commission (or your local regulator) to check if someone is registered.
If you answered yes to any of these questions, you may be dealing with investment fraud. think it’s a scam, don’t be afraid to say no. Just hang up the phone, delete the e-mail or walk away.
