Tuesday, March 30, 2010

Investing Scams to Watch Out For

The trouble with investing is that it is a slow process. It can take years to see results and achieve your goals. However, it is human nature to want things now and this can create a problem for investors as it can make us reach for unrealistic things. This is where investor scammers step in and try to take advantage of greedy investors. Here are list of a few of the know scams out there. Watch out for these!

The Pump and Dump

If you are on investment forums at all, you probably have seen this in one form or another.  It is simply an investor, or groups of investors, buying a stock in a company and then using specific tactics to move the share price of that stock higher.  These tactics can include using forums and fake news releases to spread mis-information about a company which suckers react to.  These people can be very convincing so always be on our guard.

Newsletters

There are investing newsletters out there that are genuine and the real deal.  Trouble is, there are also a lot of newsletters whose business is only to sell subscriptions as opposed to selling good investment advice.  The unscrupulous newsletter writers really have no interest in how well you do as an investor.  Be sure to check out online reviews of the newsletters (but make sure those reviews are genuine) to be sure the newsletter you are interested in is valid. Better yet, learn how to do the investing yourself so you do not need to rely on newsletters.

Anything Claiming High Return for Low Risk

This is the holy grail of investment scams:  offering investors a way to double, triple, earn 40% of their money with absolutely no risk.  This is impossible and if anyone tries to convince you otherwise, run far away.  Earning a above average return investing requires a certain amount of risk.  If it sounds too good to be true it is!

This article was written by The Dividend Guy. To learn more about dividend investing, please follow my RSS feed or Twitter account.

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