Q I have a little money to do some investing, but I hear that there are a lot of scams regarding investments. How can I know where to invest my money wisely?
A Investment scams are getting more sophisticated, and as a result more difficult to detect. Scammers are quite talented at deceiving people, which results in more victims. Usually, there are patterns that come up to raise those “red flags.”
Scammers use real-life situations, fake websites of legitimate businesses, and sharpen their skills to outwit even savvy investors. Scam artists are experienced at the art of persuasion, and know which questions to ask to make you most susceptible to their pitch.
Ever wonder how scammers do what they do? The FINRA Investor Education Foundation provides some interesting theories on the science behind scams. Here are some of the most common tactics:
• The “Phantom Riches” Tactic — dangling the prospect of wealth, enticing you with something you want but cannot have. “These gas wells are guaranteed to produce $6,800 a month in income.”