Be Wary of Investment Scams When Planning for Your Financial Future
Maintaining a diversified investment portfolio is a sound financial strategy that supports long-term goals. However, investors must remain vigilant against increasingly sophisticated scans targeting their assets.
Losses due to fraud in the U.S. topped $10 billion for the first time in 2023, and the largest chunk of that pie — more than $4.6 billion — was due to investment scams. That figure marked a 21% increase from the prior year1. Investment scams come in many forms2, which is part of the reason why they’ve become so disruptive. Fraudsters exploit the diverse ways individuals invest and the motivations behind those decisions, continuously evolving their tactics to reach new targets.
Let’s take a closer look at what to watch out for and how to keep yourself safe.
Be Aware of Scams Both New and Old
You have likely heard of Ponzi or pyramid schemes, which have been around for many years. Both schemes fall under the umbrella of investment scams. In general, these scams convince people to invest in a business or fund, with the promise of huge returns. However, scammers mislead investors about profitability while urging them to keep making big investments, which falsely props up the “value” of their operations.
While Ponzi and pyramid schemes are not new ideas, there are emerging scams with much shorter track records but equally damaging outcomes. For instance, cryptocurrency-related fraud increased 45% last year3. Like Ponzi and pyramid schemes, crypto scams trick people into believing that they’re about to take advantage of an exciting, new investment opportunity. Scammers often will impersonate a business or a well-known person, such as a celebrity, to trick individuals into thinking they are following investment advice from that business or person. Victims end up putting funds into illegitimate websites and then can’t get their money back when they realize they’ve been duped.
Because cryptocurrency accounts are not insured by the Federal Deposit Insurance Corporation (FDIC), it is especially important to be cautious when making these types of digital investments.
Keep Your Money Safe
Generally, it’s a good idea to avoid downloading and using unfamiliar apps or websites, and that’s true when making investments. You should also avoid sending money to someone you meet online or making any investment based on their advice.
Be thorough when reviewing investment opportunities and raise a red flag if anything sounds too good to be true. If you feel pressured to “act fast” or are told something is a “sure bet,” that should sound an alarm, as investment decisions should be carefully researched and you should always know that there is inherent risk with investing.
Old National Wealth Advisors can help. Working with an experienced wealth advisor can help you avoid traps. We can recommend more tried-and-true options for your money while developing a long-term plan that manages risk and focuses on steady growth.
2 https://www.investor.gov/protect-your-investments/fraud/types-fraud
3 https://bankingjournal.aba.com/2024/09/fbi-crypto-related-fraud-losses-increased-45-in-2023/
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