How to avoid becoming a victim of the investment scam

The constant desire of people to make money quickly and easily makes them often fall for the fishing rods of the investment scam, or so-called financial pyramids. Take some time and special recommendations for potential victims. Guided by them, citizens will be able to save their nerves and recent savings. Legislators are also prepared to increase the financial literacy of the population, in addition to the regulator. If you are interested in this topic, we recommend you to learn the most famous examples of investment scams here.

How to recognize an investment scam (financial pyramid)?

Last year, one of the banks published a financial literacy textbook for schools, which explained that the earnings on the pyramid are possible only at the expense of dreamy gadgets who did not have time to leave it. In response, the “pyramid builders” have become more resourceful in their means, which probably prompted that bank to return to the topic a few days ago and publish recommendations on its website that concisely, but rather intelligibly explain the signs of a fraudulent organization that you should pay attention to. 

According to the recommendations, there are at least a few signs common to all financial pyramids:

  • lack of a license of governmental agencies;
  • the promise of high yield, several times higher than the market level;
  • lack of own fixed assets or other expensive assets;
  • yield guarantee;
  • massive advertising in the media and the Internet;
  • the absence of any information about the financial situation of the organization – the payment of funds to new participants from the money contributed by other investors earlier.

For law enforcement and supervisory authorities, such signs are one of the signals for verification activities.

How not to fall for the scam?

The Bank advises citizens first of all to pay attention to the proposals on the profitability of attracted funds – if it significantly exceeds the offers of banking institutions, then there is a high probability of losing such investments.

Another important point is the absence of obvious signs of economic activity. For example, an organization’s advertising promises high interest rates due to “investing in high-yield stock market instruments”, but during the monitoring it turns out that in reality the organization does not trade on the stock exchange, and the promised interest is paid only by attracting money from new participants.

The main focus in educational activities should be on the development of a cautious and thoughtful approach to the preservation and increase of capital. The Bank especially pays attention to the fact that the accumulation of savings can be completely risk-free only in the form of a bank deposit. With a certain amount of risk, but with the possibility of obtaining a higher income, you can place money on the stock market. All other ways to get rich quick on the financial market end in loss of funds. Probably, the most valuable advice is not to trust your money to the unchecked organizations.