MyMoney Online, Personal Finance with Warren Ingram

How to spot a sophisticated investment scam

Some investment scams are crude.

Others have an air of legitimacy.

The Money Show’s Bruce Whitfield asked personal finance expert Warren Ingram how to tell if what you’re being offered is truly an amazing investment or merely a scam.

If it’s too good to be true… (you know the rest)

An investment in shares is the most lucrative one you can make over the long-term. For the last 114 years, the South African stock market gave you up to 15% a year. So, you need to ask some serious questions if anything guarantees you more than that.

Warren Ingram, Personal Financial Advisor - Galileo Capital

How on earth can anything give you a linear return that’s way more than what the market offers? If they do then you’re taking way more risk than you think to secure that guaranteed return. Prepare to lose money.

Warren Ingram, Personal Financial Advisor - Galileo Capital

3 warning signs that it’s a scam:

  • Exclusive investments (i.e. offered to only a few people)

  • Any pitch that creates urgency (e.g. “For a limited time only!” or “Invest now before it’s too late!”)

  • Any investment that’s not regulated with the Financial Services Board (you need to see the proof)

Ingram warned against the five most prevalent investment scams:

1. Off the book deals

If it’s off the books it’s almost certainly a scam.

2. Ponzi schemes

Money from new investors provides returns for earlier investors.

3. Affinity fraud

Fraudsters dupe esteemed members of society with an “investment” opportunity, leading others to be less critical than they would otherwise have been.

4. Unlicensed individuals selling securities

If the broker is not licenced; don’t deal with him.

5. Pump and dump schemes

Investors with inside information buy a share, then recommend it to others, resulting in the share price rising.

Once the price goes up, they dump their stock, sending the price down.

For more detail, listen to the interview in the audio below.

Enjoy The Money Show, but miss it sometimes?

Get the best bits emailed to you daily, right after it ends:

Subscribe to our Business Wrap Newsletter


Recommended

by NEWSROOM AI
Read More
Nigeria calls for sanctions against South Africa

Nigeria calls for sanctions against South Africa

"Enough is enough," said the Nigerian government in an official statement.

'Somalia is a war zone. We have nothing else to do.'

'Somalia is a war zone. We have nothing else to do.'

The Somali Community Board of South Africa lost 100 tuckshops in the past 24 hours, says it's National Treasurer Ibrahim Abdullahi.

Why Mergence Investment Managers are buying Naspers/Tencent, Motus and Datatec

Why Mergence Investment Managers are buying Naspers/Tencent, Motus and Datatec

Portfolio Manager Peter Takaendesa shares his stock picks of the week on Bruce Whitfield’s The Money Show.

8 lessons about investing I learned while driving my car

8 lessons about investing I learned while driving my car

Financial planner Gregg Sneddon ("The Financial Coach") uses driving as an analogy to teach valuable lessons about investing.

The stock market is not a casino. Investing in shares is nothing like gambling

The stock market is not a casino. Investing in shares is nothing like gambling

Too scared to “gamble” away your hard-earned cash? Kabous le Roux asks you to consider this simple argument with an open mind.

'My first memory of money was my mom crying about it'

'My first memory of money was my mom crying about it'

Personal finance author Sam Beckbessinger opens up about her attitude to money (hopes and fears, successes and failures, etc.).

Popular articles
'Duke and Duchess of Sussex visit highlights goodness of South Africa'

'Duke and Duchess of Sussex visit highlights goodness of South Africa'

Professor Pitika Ntuli weighs in on Prince Harry and Meghan Markle's tour of the country.

Audi Q8 'marries elegance and practicality', but it comes at a price

Audi Q8 'marries elegance and practicality', but it comes at a price

'Large and in-charge' - Motoring journalist Naresh Maharaj rates Audi's new luxury SUV offering.

4 things you should never say if you want to get rich

4 things you should never say if you want to get rich

Don’t ever say or, worse, believe any of these wealth-destroying platitudes, implores personal finance expert Warren Ingram.

Fraudsters are getting professional, scamming consumers with ingenious methods

Fraudsters are getting professional, scamming consumers with ingenious methods

“It makes all of us a target to fraudsters,” warns Manie van Schalkwyk of the South African Fraud Prevention Service.

'We have evidence that the EFF and Julius Malema took bribes for tenders'

'We have evidence that the EFF and Julius Malema took bribes for tenders'

Arabile Gumede interviews Stefaans Brummer, a journalist at the amaBhungane Centre for Investigative Journalism.

46 women rescued in Joburg sex trafficking raid

46 women rescued in Joburg sex trafficking raid

An expert on human trafficking explains how the syndicate operates and how women are lured into dens.