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10 Signs of an Investment Scam You Need To Know

10 Signs of an Investment Scam You Need To Know

If you’re looking to invest and make money in the stock market, chances are you’ve seen people who are advertising a “sure 100% return,” or similar incredible promises. You might ask yourself, “How is this possible?” Well, in most cases, it’s not. And in most cases, the offers and promises are misleading, if not outright fraudulent.

Even the most sophisticated and experienced investors can be caught up in a good investment scam, as evidenced by the many professional money managers who placed their clients’ money with Bernie Madoff. So what are you, the average-intelligence, average-experience investor, supposed to do to protect yourself from unscrupulous con artists who try to separate you from your hard-earned money?

There are several signs that can alert you that something is not right with an investment scheme, provided you pay attention and know what you should be looking for. Here are 10 of them:

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1. If it seems too good to be true…OK, you know this.

You know it. There are rare individuals who can occasionally make a killing in the market, but they are few and far between. And they generally can’t do it consistently, month after month, year after year. So if someone is guaranteeing a particularly high return and claims that it is steady as a rock, you should run the other way.

2. They are offering a “guarantee.”

No one can guarantee a specific return, unless they’re offering fixed income products like bonds or Certificates of Deposits (CDs). No stock market return can ever be guaranteed. Period.

3. It’s a complicated or unique opportunity.

Sometimes people claim that they have access to a unique opportunity, something that is not offered to regular people. They might use fancy terms like “prime lending certificates” or “private placements,” which actually mean nothing but sound pretty impressive. Or they may claim to have mastered a technique involving futures or forex.

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4. New business models.

Maybe you are offered the chance to get in on the ground floor of a new, “world-changing” technology. Biotech and green tech companies are particularly popular right now. A company claims it holds a patent for something that would truly revolutionize the way the world works, and you are so lucky that you can get in before the big institutional investors do. Guess what? The technology might sound great in theory, but odds are good that it doesn’t even exist.

5. You are brought in by someone you know as a “referral.”

These are some of the oldest scams in the book, and they rely on the power of social circles. The scammer will pay off the people in the initial rounds of the scam, in order to persuade them to bring in more of their friends and associates. You are convinced because you actually know someone who got paid the promised amount. You might get lucky and actually get what you were promised. But once the scammer gets what they want, it’s, “Bye-bye!” And you will be left holding the (empty) bag.

6. Urgency.

Many con artists will pressure you with “limited time offers” in order to force you to make a quick decision. They don’t give you the time to consider whether or not their offer truly makes any sense at all.

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7. They don’t use independent third-party accounts.

No true investment will ever “pool” your money with that of others and hold it in a common account. You should always have your own individual account, which should be held by someone other than the scammer, and you should receive periodic updates. Of course, this didn’t stop Madoff’s Ponzi scheme, but it’s a good warning flag for avoiding less sophisticated scammers.

8. Conspiracy theories.

Scammers like to prey on people’s fears. They may imply that the government is actively “preventing” you from getting rich by keeping you ignorant or by barring you from certain types of investments, which they conveniently can offer to you.

9. They are unregistered.

This is a no-brainer. Any legitimate investment company and the person offering the investment must be registered with the SEC or another government agency. Make sure you get verification of this registration. It will not always protect you, but registration at least gives you recourse if it does turn out to be a scam.

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10. Really bad investment advice.

Scammers might suggest you put “all of your assets” into their investment. They might tell you to take out a loan or cash in your 401(k) in order to obtain the funds to invest with them. Anything that goes against common sense should be a huge red flag.

It’s your hard-earned money, and yes, you want to invest it so it can earn more. But invest it wisely, and don’t just give it away to clever con artists.

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Simon Andras

Simon is an entrepreneur who blogs about lifestyle.

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Last Updated on June 6, 2019

The Average Retirement Savings and How to Save Wisely

The Average Retirement Savings and How to Save Wisely

Are you on track for retirement?

If not, don’t worry, I’m not sure either. I save each month and hope for the best.

Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

What Does the Average American Have Saved for Retirement?

Saving for retirement is tricky.

Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

Here are the average savings Americans hold by age bracket:

20’s – $16,000

During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

30’s – $45,000

At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

40’s – $63,000

This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

50’s – $115,000

During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

60’s – $172,000

By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

Ways to Save Money on a Tight Budget

The sad reality is that most Americans aren’t saving enough for retirement.

Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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How to Save Money Each Month

By this point, you know the average amount of money you should have saved for retirement based on your age.

But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

Top Money Saving Challenge Tips

To prepare for your financial future and not be another statistic you need to be different.

How?

By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

Automatically Contribute Towards Retirement

If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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Use the Right Tools to Know Where You Stand

Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

Bring in Experts to View Your Blind Spots

If you have too little or too much money saved, you should consider hiring financial experts.

Why?

You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

Regardless of the reason, getting help may help improve your financial situation.

Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

Speed up Your Retirement Contribution

After learning how to manage your money well, the next best thing is to earn a higher income.

You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

By starting a side-business.

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This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

Reach Financial Freedom with Confidence

What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

My guess is that you’d feel happy and relieved.

Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

If you do, you’ll save money and pay debt faster.

Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

Featured photo credit: Huy Phan via unsplash.com

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