If you are the kind of person who plans for the future, you may have been proud of yourself when you decided to start investing. Using your money to earn more money is a popular way to grow funds for retirement, travel or security for your family. However, there are downsides to investing, which is why not everyone does it.
Investing can be scary, and it certainly involves a leap of faith when you hand over your hard-earned money to a broker. You may understand the potential risk, but the old saying assures that the greater the risk, the greater the reward. However, how can you tell if the return a broker has promised is reasonable or that it is too good to be true?
Warning signs of a scam
When you meet with a broker, you may feel a little overwhelmed. He or she may speak quickly and use terms you don’t completely understand, or the broker may talk very slowly, making you feel like a child. While neither of these may indicate that your broker is about to take advantage of you by committing investment fraud, you may notice signs like the following that may be red flags:
- A broker working on commission who tries to sell you more expensive products that do not fit your circumstances or goals
- A salesperson who promises that you will get rich from this investment
- A broker who says or implies that he or she has inside information about the future of a certain security
- Someone who tries to rush you by saying you have a limited time to take advantage of the offer
- A broker who encourages you to take out a loan, borrow from your retirement, use your savings for a single investment or reveal your bank account number
- A broker who pushes you into high-risk trades without discussing your investment history
- Securities from which you cannot cash out easily and quickly
Of course, at any time a broker or salesperson offers you a product you do not understand, you have the right to step away until you obtain more information. If you should find yourself caught up in an investment that seems wrong and you fear you have lost money because of an unscrupulous broker, you may feel embarrassed. However, these kinds of scams are common, and you have every right to fight to reclaim the money you lost. A skilled California attorney can fight alongside you.