Are you eager to start the new year with a bit of investing?
Yes, you can use apps, but for long-term, substantial returns, you will likely need to look into an investment company. Choosing the right company is tricky, and as there are countless investment firms that are promising high returns, it can be hard for newcomers to know what a legitimate investment opportunity and a potential scam are.
This article lists the red flags to look out for when choosing an investment company, so read on to learn more.
Unrealistic Promises of High Returns
Everybody wants to invest £1 or $1 and make back millions from a single stock. That’s why people play the lottery!
However, one of the largest warning signs of a dodgy investment company or financial wealth advisory services is that they will guarantee that you will make high returns with little to no risk. Simply put, that’s not possible!
No legitimate investment is risk-free, and market fluctuations are always something to be aware of. So, if it sounds too good to be true, it likely is.
Lack of Transparency and Regulation
A reputable investment firm will always be transparent about its operations, regulatory compliance, and of course, the investment strategies it uses. So, before committing to one firm, you should check that the company is registered with the appropriate regulatory bodies. In the U.S., this is the U.S. Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA).
Pressure to Invest Quickly
In the last year, if you use an online banking app to send money, it will alert you to the fact that fraudsters will pressure you to send them money. This is very much the case in fraudulent investment companies, who will also seek to create a sense of urgency to pressure you into making hasty decisions.
Legitimate investment companies will allow you the time to conduct research, ask questions, and make an informed decision. So, if you feel rushed, it is wise to walk away.
Complex or Vague Investment Strategies
An investment company that is professional should be able to explain its investment strategies in simple, jargon-free terms. If they cannot, or they refuse to offer a straightforward explanation of how they seek to generate returns, this is fishy and can point to them hiding something. If an investment firm lacks transparency, this is a red flag and can point to fraud or poor management, so it is best avoided!
Negative Reviews and Poor Track Record
The internet is the perfect tool to conduct research, and when you are looking to choose an investment company, you should research the company’s reputation. If there is a history of complaints, issues with law, or unhappy clients, this should raise alarm bells.
You should also seek to verify the company’s track record by looking at its past performance and seeing if they have delivered consistently over time. Of course, don’t be too harsh. Even top-notch investing firms may have the occasional bad review. If you aren’t sure, book an over-the-phone interview and ask them questions about reviews and performance and ask for proof of their successes with investing in the past.
