Stop Following New Financial “trends”
Whether it’s investing in the latest cryptocurrency or eyeing some type of ” make money doing nothing!” » » It can be hard to resist all the shiny ‘new’ financial trends that keep popping up. However, often these trends are not really that new, and even if they are, it is important to look for signs that they are doomed to failure. Any income or investment opportunity that seems too good to be true most likely is. Fraud or not, chasing these trends is usually a mistake.
Of course, you know how not to fall for a phishing scam; for example, you wouldn’t give out PayPal information in a message from an unknown number. Here are other types of financial trends you might be better off ignoring.
Avoid “get rich quick” investment opportunities.
It is important to be wary of financial trends, which are not outright scams, but are a very big risk if you don’t know what you are doing. Take, for example, gaming applications. For example, if you are going to invest large sums of money in a sports betting app (especially one that promises to pay out in cash), you need to budget for accruing losses and long periods when you do not win anything. Even if you haven’t been scammed, these apps are usually not an effective way to make money.
Cryptocurrency also falls into this category: it’s a relatively new market, and it involves more risk than advocates might give you .
Also avoid income scams
In addition to investment scams, many income “opportunities” are also scams. A typical example of this is virtual personal assistants. You are quickly hired, and almost immediately you have to pay a salary from your “boss”. You can see some of that money, which gives you a sense of security when you complete the next task from your boss: send money to another account or buy gift cards. According to the Federal Trade Commission , these scams work because banks have to make funds from deposited checks available within a day or two, but it can take weeks for a fake check you received as a “payment” to uncover. And you will have to pay the difference at the bank. The FTC reports that the average reported loss from counterfeit check fraud is $2,300.
The best way to avoid income scams is to do your research and take your time. Avoid the stressful hiring process and search the web for the name of the company, as well as words such as review, scam, or complaint.
Stay skeptical when it comes to financial trends
To summarize, here are four signs of fraud (or the possibility of fraud), according to the Ontario Securities Commission :
- Promises of high returns and low risk.
- Claims of “hot tips” or insider information.
- Increased pressure to buy now.
- The seller is not registered to sell investments.
As a general rule, avoid “get rich quick” investment advice. If this were actually true, why would this person share this with millions of people? More questions to ask yourself: Do you feel pressured by someone to act on an idea with zero track record? Do you personally understand where your money will go? Do your own research before investing anywhere.
For more informed personal finance advice, here’s our budgeting guide , along with personal finance steps you can take now to prepare for a recession.