How to Spot Financial Investment Scam? Know Scammers Tricks

Posted by Grace under Investing on August 5, 2016

Here are the top 5 tips to spot financial investment scam. I will also include some tips on how to determine a legitimate and legal investment. Here in InvestmentTotal, I don’t only inform the readers about investment opportunities, I am also informing them what to do to avoid getting scammed. I will give you some clues today on how an investment offers are just “SCAM”.

If you find an offer turned to be an scam, please report the scammer or scammers immediately so that they will never victimize other people again and again.


Have you read some lines like “turn your $1,000 into $1,000,000 in less than a year”, “invest $500 and get $1,000 after few hours”, or a catch like “how I made $2,000,000 in less than a week for just $10 investment capital?”. These are example of catch, what’s the catch anyway? The catch is to attract you about their scam opportunities. Some of these catch had been type or written in a printed materials that looks like real and professional. Well, I assumed you don’t easily believe in these examples of “catch”.

Before I continue, let me give credit to the original source of this tips, The Philippine Securities and Exchange Commission (SEC) and Mr. Francisco Colayco. Let us thank them for this guide.

How to Spot Financial Investment Scam?

1. Higher Profits, Faster Profits
2. Less Risk or Less Effort
3. Something Special that Genuine Investments Don’t Offer
4. More Urgent than the Real Thing
5. Offered by a Stranger

Higher Profits and Faster Profits

You can easily know the investment offer if it is a scam or legitimate, by just knowing the return on your investments promised by an agent. A real investment may only earned at least 7 percent to 9 percent annually, if an investment offer promise you to get a return more than 20% a year, you should avoid the offer. Some are offering higher than 20%, or 300% in a year.

Even a stock equity investment in mutual fund can only earn an average of 18% annually and it’s not guaranteed. So, if someone offers you an investment opportunity, try to watch out the returns, if the agent is saying “you can get fast return on your investment” or “a 300% profit after a year”, think 301 times before you invest your money.

Less Risk or Effortless Investing

Investing requires difficult task, if you want to build wealth, you have to work for it. So, if someone says, there is an effortless investment opportunity without doing anything such as opening an investment account and submitting important documents, think smartly. In investing, an investor requires doing an “assignment” such as analyzing the economic situations, stock analysis, business and industry research, etc. The investment offer might be a possible scam if there is no careful planning that has been made.

Something Special – Just Another Catch

A genuine investment is showing the real cases and will let you think about the possible loss of investment capital. If an investment offer has lot of “blah blah blah” such as “great promises”, just to make you impressed or convinced, I think there is a secret message behind the offer. If an agent talks only about profits and making you feel excited, make sure, open your mind to the offer and stay away from it.

More Urgent than the Real Thing

As I have said awhile ago, you need to have a careful planning when investing. If an “scamster” tell you to act quickly or join quickly. He will let you think that the investment he is offering is a golden opportunity and you made a big mistake in your entire life if you will not join or invest. He will let you think that the investment offer will help you to get rich fast. But in the real world, if you want to get rich, work hard, you shouldn’t invest wisely, plan your finances carefully, wait patiently, but to get rich overnight? No, way!

Offered by a Stranger

Most investment scam are offered only by an stranger. If you received an email message about investment offers, just ignore the message. Companies that has real investment opportunities are listed in Security and Exchange Commission, these companies has real address, phone number and official websites and never send phishing eMails to people. So beware, especially if an investment offer on the internet. If you don’t know the person and he is offering an investment, check his background, is he a registered financial planner, if he is connected with financial institutions, kindly call the company he is affiliated with and ask if the person is really their agent, broker or one of their financial advisors.

Do not be the next victim of investment scam. Be wise and smart enough. You should not repeat the same mistakes made by other people, that, they didn’t investigate, they didn’t make a due diligence, they didn’t see the risk, they just seen “opportunity”, opportunity to lose money. I hope you find this guide useful. Some people offer investment advice for free, you better be aware.

Tips on Not to Get Scammed

1. Attend seminars on investing – you can attend seminars, financial literacy seminars, investing in the stock market seminars, some offers for free some are with charge. You can get connected with the registered financial planner and financial experts to help you invest your money such as;

  • Mr. Francisco J. Colayco

Kapatiran Sa Kasaganaan Service and Multi-Purpose Cooperative
Address: Head Office (Philippines): Unit 807, Citystate Centre Condominium, 709 Shaw Boulevard, Pasig City 1603
Telephone Number: (632) 637-3741 or Mobile Phone at 0917-853-7333

  • Mr. Randell Tiongson:
  • Marvin Germo:
  • Burn Gutierrez:
  • Fitz Villafuerte:

2. Hire Financial Planner and Advisor – you can hire a financial advisor, mostly a financial advisor is connected in a insurance company or financial firms.

3. Be financially literate – you can be financially literate in different ways such as reading books, reading forums and blogs like, or join investors group on Facebook.

  • The Global Filipino Investors:
  • OFW Usapang Piso:

3. Read business and finance books – there are useful business and finance books you can use if you want to expand your knowledge about finances especially investing. I highly recommend the books of Mr. Francisco Colayco such as “Making Your Money Work” and “Wealth Within Your Reach”, and the book of David King’s “You Can Be Rich”.

4. Don’t ever dream to get rich overnight – don’t get lured to investment offers especially if the offers are very convincing, convincing in a way that it offers “high return on investments”, or teach you to become rich quick.

5. Always think, investing is risky – investing is risky. It will be more risky if you don’t know what you are doing. Like what we have discussed awhile ago, there is no such “effortless or non-risk investment”.

Hey, just increase your FINANCIAL IQ and you will never be a victim of financial investment scam!

How to Report the Scammer?

If the incident is investment scam related to buying stocks, mutual funds and bonds you can report to the Security and Exchange Commission. You can also ask for help in the NBI. In my other post next time, I will write topics about the different types of scam, online or internet scam, email phishing, phone scam and email scam and how to report them.

Now you know how to spot financial investment scam! Did you find this article useful? Subscribe to InvestmentTotal newsletter via email to receive financial topics and investment opportunities updates instantly. Thank you for reading.

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