Three Investing Red Flags
New technologies and the advancement of the internet have opened up the way for many types of brand new investment opportunities. Unfortunately, not every investment turns out to be a good one. Unsuccessful startups, investment fraud, and scams are a bane every investor has to be wary of. For this reason, the ability to identify problems that may be extant in an investment opportunity is vital. Here are three red flags about which every investor should be aware so as to avoid them.
Things That Are Too Good to be True
It just might be too good to be true if it appears to be so, but every year, many people get pulled into investments that fit this bill. Businesses that guarantee strong returns in a brief time frame of anything under three years are either flat out lying or unusually naive. It is important to take detailed inspections of businesses, marketing, and strategies for growth in order to develop critical thoughts about realistic numbers and goals that are implausible.
In the business world, the simple fact is that profits cannot be guaranteed. Any business willing to promise returns is generally seeking any investor seeming remotely interested, and a savvy investor will avoid these types of companies. Most scam artists will offer a promise of guaranteed returns in order to reel in unsuspecting people; those who ignore the bait will avoid being captured in a bad investment.
Total Strangers’ Offerings
An easy scam to spot is that from a complete stranger who offers up an unsolicited opportunity for a so-called investment. Such strangers have nothing to lose and everything to gain. Almost one hundred percent of unsolicited investment offers turn out to be scams. These are simple to spot and easy to avoid.
Finally, any sort of buying pressure is a sign of a no-go. A person pressuring the investor to sink money into an investment is a red flag of something going wrong and a need for someone else’s finances to help fix it. Businesses on the decline are eager to convince investors to put in money before they can realize what is going on; those who fall into the trap will lose money. Businesses should seek to impress, not bully or strong arm. These investing red flags will alert any investor of when to steer clear of a mistake or scam.