Site icon Best Financial Advisor – Gilbert, Chandler, Mesa, Queen Creek

Investment Red Flags

Investment Red FlagsInvestment Red Flags

Purchasing an investment is a serious obligation. There are certain investment red flags you should be on the lookout for to keep your money safe. In this article, we will review ten investment red flags you need to be aware of.

1. High Returns with Little to No Risk

Every type of investment carries some type of risk. Generally, the higher the potential reward, the higher the risk is. If you are being promised high, guaranteed returns that you “cannot miss”, you should put up your guard. It is good to live by the rule, if it sounds too good to be true, it is.

2. Working with an Unregistered Advisor

Before you engage to work with an advisor or agent, it is important to check they are properly licensed and registered. You should do this even if you know the individual personally. You can find registration, license, and disciplinary history for free by using the links below.

3. Spots in the Professional’s Background

When you are searching to make sure your investment professional is licensed, you should also check for any concerning spots in their background. You should check for the following:

4. Pressured to Buy Quickly

You should never be pressured to make an immediate decision. Be on the lookout for concerning phrases like “act now”. If you feel like you are being subjected to a high-pressure sale, do not be afraid to walk away.

5. Free Meals

If you receive an invitation to a free lunch or dinner seminar, you should be careful. While these seminars are often advertised as educational opportunities, the ultimate goal is to get new clients. If you choose to attend one, promise yourself that you will not purchase any products or open any accounts while at the seminar. Even if the seminar is not a pressure sell, you should expect subsequent contacts from the seminar holders to be hard sales calls.

6. Offers of Offshore and Tax-Free Accounts

No matter how you try to play it, taxes are a part of life and cannot be completely avoided. If an investment is claimed to be tax-free, you should be very careful if proceeding. One way investment managers try to get around taxation is with offshore accounts. But these accounts are high risk. By sending money out of the country, you risk never getting it back.

7. Supposed “Limited Supply”

If you are told you need to act quickly on an investment because there is a limited supply, you should be on high alert. A legitimate deal will be there tomorrow or a week from now. Always take your time when you are making choices with investments, and if you are unsure, talk it over with an objective 3rd party.

8. Insider Deals from Experts

You should be concerned if you receive an offer that is available only to a wealthy few. Look out for terms like “secret markets” and “prime base guarantees”.

9. Overly Consistent Returns

If you are being marketed a product that supposedly displays a month-after-month increase, despite market conditions, you should be on the lookout. Every investment, no matter how stable, will experience periods of loss.

10. Complex Strategies

Our final red flag is an advisor recommending an overly complex plan that promises high success. Your advisor should be able to clearly explain their plan clearly and in a way you can fully understand.

Avoiding Investment Red Flags

If you want to avoid falling victim to investment red flags, you should work with a trusted investment advisor who can help guide you and avoid pitfalls.

Questions? Want to schedule an appointment? Contact us by clicking here.

Exit mobile version