Theres is an old saying, “Financial markets are driven by two powerful emotions – Greed and Fear.”

Scamsters play on these emotions, they lure investors with quick and high returns and FOMO (fear of missing out), leading them into a trap that they find difficult to get out of. Very often this can have disastrous effects on your finances. Your hard-earned savings can be depleted within few moments or months.  It is only human to want to make profits quickly and stock markets potentially do offer the opportunity.  With enticing promises of quick and high returns, these fraudsters exploit the common man’s vulnerability for becoming rich.

Many investors are falling in this trap, now more than ever before. Going by the data on debt, especially credit card spendings and personal loan, it is evident that the pressure to live an aspirational life as early or quickly as possible.

Having said this, I do believe that scammers are constantly coming up with new and innovative ways to scam that even the most seasoned people can fall into this trap, especially if they are caught at a time when they are in a vulnerable mind space.

So how to protect yourself from such online frauds.

Whilst there is no foolproof way, we need to stay alert, vigilant and importantly be informed about the latest scams.

Some suggested ways to protect ourselves from getting scammed.

  • Understand an investment scam. Your antennae should be immediately alerted if they
    • Offer unrealistic returns
    • Ask you to download or use unverified apps or platforms
    • Ask you to transfer money to multiple bank accounts.
    • No transparency on fees or stocks, schemes, etc.
    • Do not be in a hurry to invest, do not fall for the pressure tactic that they use to get you to invest.
    • Ask them to explain the risk factors to you
    • Ask them for their company website, check their website for more details.
    • Ask them to email all the information to you before you make any investment.
    • Do not click on links sent you by unverified and unknown people
  • If you want to invest in stock market, please deal only with regulated entities and intermediaries.
  • Do your research, we have so much access to information, please find out about the company and the related schemes.
  • Validate all the information that you have been given. Please speak to a financial advisor or a family member who understands investments about such ‘schemes’ before investing.

Please understand there is no short route to make money in life. A series of schemes or tips will not help you in the long run. You may find some tips given by knowledgeable people from the stock market industry useful, however that cannot be your strategy or process to build wealth.  Wealth building is a lifelong journey, and only two ingredients are required for being a successful investor – Disciplined or consistent investing and patience.

Follow the process of financial planning, it is not only fool proof but also scam proof.