In an age where financial opportunities are just a click away, investment scams are becoming increasingly sophisticated, targeting individuals eager to grow their wealth. Unsuspecting investors often find themselves losing hard-earned money to scams that promise high returns with little or no risk.

Delories Jones, senior vice president of sales and marketing at JN Fund Managers, says it’s important for investors to conduct their due diligence and to be vigilant. She points to five key red flags to watch out for and recommends steps people can take to safeguard their investments.

Number one on her list are investments that promise unusually high returns with little or no risk.

“Legitimate investments always carry some degree of risk. Investors should therefore tread carefully,” she noted.

Another red flag, she said, is any investment that requires investors to act with a high sense of urgency, insisting that one must make their investment now. Mrs Jones urged investors to be wary of any investment that discourages research or consultation with financial advisors.

“Before committing funds, check whether the investment firm or individual is registered with relevant financial regulatory authorities. Legitimate firms operate transparently and comply with industry regulations,” she advised.

Jones said a lack of clear documentation is another sign one should look out for. “A genuine investment opportunity will have clear terms, conditions, and disclosures. If an investment lacks proper documentation or the details are vague, it’s a major warning sign.”

Finally, the JN Fund Managers senior vice president said that if an investment opportunity is difficult to understand or the promoters refuse to explain how profits are generated, proceed with caution. Scammers often use overly complex jargon to confuse investors, she explained.

She recommends the following five ways that investors can protect themselves:

• Research before investing: Verify company credentials, read reviews, and seek advice from certified financial professionals. Websites of financial regulatory bodies can help confirm the legitimacy of firms and investments.
• Never invest more than you can afford to lose: Always assess your risk tolerance and avoid investing money you can’t afford to lose. Diversification is key to reducing potential losses.
• Be sceptical of unsolicited offers: Be cautious of cold calls, social media promotions, or unsolicited emails offering exclusive investment deals. If it sounds too good to be true, it probably is.
• Consult a financial advisor: Seeking guidance from a licenced financial advisor who can help you make informed decisions and avoid falling victim to scams.
• Report suspicious activities: If you suspect an investment is a scam, report it to the relevant financial regulatory authority or consumer protection agency, or even the police. Prompt reporting can help prevent others from becoming victims.

“Protecting your financial future starts with knowledge, scepticism, and due diligence. By recognising red flags and taking the necessary precautions, you can ensure that your investments are both secure and legitimate,” she added.