Life Hacks

How to Identify an Investment Scam

There are many different types of investment scam that sprout up every now and then. So, it is important to always research about the company offering the investment products.

Also, take your time to read and understand investing and know exactly what you are throwing your money at.

I must say that there are safer and credible investments companies out there, so pick and choose the ones that meet your needs.

Here are some red flags of an investment scam;

1. Unregistered Company

You might want to check if the company offering the investment package is registered with the appropriate authority (in the case of Ghana, the Security and Exchange Commission).

If it is an individual investment advisor, find out if he/she is licensed and have the expertise to handle your investments.

When none of these exists, you must stay away as you may be at risk of losing your money. Fanciful offices are not enough to prove a good investment company so look beyond the manager’s accent or big chair.

2. Pressure to Invest

Have you ever been pressure to invest in an investment scheme? I bet it didn’t go well. That is exactly how Ponzi schemes works.

Also Read:

a. Sending Money to Africa: 5 Cheapest Online Money Transfer Options
b. How to reduce business taxes in Ghana 2022

With fraudulent investment schemes, you are usually given shorter time to invest or you miss the opportunity. The referral, so to speak gives you time limit and constantly checks on you to be ensure that you’re convinced to join the scheme.

Fraudsters use this strategy so you don’t get time to think through your decision or research about them. The truth is that, this strategy works extremely well except when you stand your grounds.

I think any credible investment should be available and easily accessible at anytime, anywhere; online or at physical offices.

You should have enough time to think through your decision, after all, it is your hard earned money we’re talking about here. So, anytime you feel pressured to invest in something in a limited time, you could be in for a scam.

3. Bad Customer Support Services

Money time is a serious time, and whoever you kept your money with must be ever ready and available to attend to you. Anytime you notice that customer support lines are irresponsive or not stable, then it is a red flag.

I had this experience in 2018 where I threw a few thousands of cedis on an investment scheme. Less than 90 days in, the trading website became unstable.

I got worried and had to contact a potential buyer in the company’s investor support forum, and quickly sold my holdings.

About 30days later, Security and Exchange Commission Ghana declared them fraudulent. I guess I was luckier than smarter as a lot of investors lost their monies.

4. Complex Investment Scheme

You see, whatever you desire to invest your hard earned money in must not be too complicated to understand. When someone approaches you with an investment idea or product that doesn’t sound good to you, you have to stay back.

Where there are too many jargons describing an investment scheme, with very easy means of deposit but very complex withdrawal processes, then you must pause and reconsider your decision to invest.

Always ask as many questions as you can until you are convinced and comfortable enough to invest. Even so, be cautious because some of these scammers are professionals who are trained for months and can easily play around with words to get you to invest.

5. Promise of high returns with low or no risk

Nothing lures a person into an investment scam than higher return on investment (ROI) at low or no risk at all. People are always moved by the concept of “doubling their investment” in few months.

You see, that can never happen even with well established investment firms.

As a rule of investment, “the higher the risk, the higher the return” right? So, when the return on an investment seems too good to be true, then it is too good to be true.

To be sure , always check the percentage return against benchmarks like the prevailing T-Bill rate, for fixed-income investments and the return on the stock exchange, if it is a stock.

Where there is too much gap between this and your ‘promised’ interest, then you could be in for a scam.

6. Offer of limited – special offers

Scammers are smart, and can cash-in more when their scheme is the talk of the town. That is when the FOMO sets in for many people. So scammers use this method to make you feel like you are missing out (FOMO) on a new trend. Why should there be a limited offer for an investment package?

‘FOMO’ experience is such that, the hype from social media and the internet only could make you feel like you are living in a different world. But if you know these principles of money, then you should be able to maintain your financial discipline. You should be able to choose when to invest without the fear of missing out on anything.

Even some of the most credible investments companies cannot guarantee you a return on your momey, let alone that with a ‘special limited’ offer. This is a sign of a fraudulent investment, and you have to stay alert.

7. No Track Record of Performance

I understand that alot of new investment companies are being established from time to time, and they’re doing well.

What I meant to say is that, you must be wary of new investment companies who have no track record of expertise or performance to show.

Don’t just jump into the bandwagon overly focused on a certain promised profits, or because a friend or family is your referral. Nope, don’t do that. If you are unsure about your money decisions, read this 2 minutes guide on investment advice for young people.


There were many established companies with famous board members and management, yet ended up being a scam.

You can consider EDC Investments Limited, Databank Ghana and many other credible, established investment companies with relevant expertise to make your money work for you.


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