Bad Investments You Should Avoid

By April 10, 2018 September 12th, 2018 Investing
Man looking upset over makingBad Investments

The world is filled with bad investments. They are just waiting for the unsuspecting investor to open themselves up to be taken advantage of in the worst possible way. This is why you must ever be on your toes. At every opportunity, you must ask yourself what the catch is and how much you have to lose by participating. If you do not do this, you run the risk of being the victim of a bad investment.

Depending on how much you risk in an investment, you could easily lose your shirt. Sometimes you can lose more than that. You could even place yourself into serious debt for a very long time. And that you may not crawl out of easily. Beyond that, you may lose your confidence in your own ability to manage risk. That can be a major blow to a lot of investors that keeps them from ever making any significant money.

Understanding The Risk

You must understand from the start that every money making opportunity is a risky investment. To think otherwise is to be naïve. You shouldn’t walk into every investment opportunity with the realization that someone else stands to get rich on your gullibility or lacking insight. It’s better to face investment opportunities with both eyes open. Just because you get stung investing a few times, this does not mean you should quit while you are behind. Most intelligent investors got really hurt in bad investments. Even before they ever learned to have the stomach or the talent to invest their money wisely. Loss is painful, but it is a valuable teacher. This is only true if you take the time to learn from your investment mistakes.

The Pump and Dump

Long ago, greedy business people learned a clever strategy called the pump and dump. Generally, this is a common scam that runs through stock investment circles. Including those people who start up small businesses and get them listed on the stock market. If you have surfed the internet looking for investment ideas, you have probably run across these individuals. They offer their stock picking advice in a weekly newsletter.

In essence, though they will insist that they are on the level, many of these so called stock gurus are in the business of pumping stocks. They play up the benefits of buying these stocks to their email list or website readers. Then their readers start buying up the stock like crazy. Once the pumping phase of this scam is over, the so called guru and his friends, who were heavily invested in the companies they were pumping, wait until stock prices reach a maximum profitability point.

Why It’s Risky

When they are satisfied with the money they have made, they all dump their shares in the stock. They do this without telling all the people they pumped the stock to what they have done. Of course, the stock price tanks from here. The people who bought into the investment scam will lose a lot of money. If the so called stock guru is a clever talker, they might be able to set their audience up to do this scam on them over and over again.

This works especially well if the so called stock guru can show the audience an occasional winner. This helps them regain some capital to lead them on to be set up for future losses with this strategy. So, it is best to look to see if a stock guru is creating consistent wins for their audience, or if they run this scam in cycles to generate massive profits for themselves. If you cannot find independent verification for the claims of a so called stock guru, then you may not want to risk your money in the investment opportunities they are peddling.

Forex Scams

Other risky investments that exist, because your government does not mind you getting hurt for all the wrong reasons, are the scams that occur because of the deregulated markets like Forex. There is a lot of money to be made in the foreign exchange markets. This is where currency pairs and binary options are traded. Unfortunately, the majority of platforms for Forex and Binary Options are themselves extremely shadey. They engage in practices like giving you incorrect or overly delayed data feeds. They also play the game of knocking out your stop limits to cause you to lose money wrongfully.

Why It’s Risky

If that is not bad enough, you then find that many of the forex platforms will not allow you to hedge in both directions to protect your position. But, the worse practice of these sites and platforms is that they will often not allow you to pull out the money you have rightfully earned on their trading platforms. Such investment situations could be remedied if these markets were regulated, but these types of investment problems are allowed to continue because criminals often have more rights than honest investors. This is a truth that a lot of good investors eventually learn to be the case after being the victims of certain types of investment scams.

Switching Gears

While there are a lot of risky investments that can work you over as an investor, it is important to understand that there are good investments you can make too. You could pick stocks based on your own efforts to properly be educated in how stocks work. You could even use a currency exchange that actually has a good reputation. This tends to work better than a platform with a bad reputation. On the other hand, you could invest in something more local like real estate and build equity in a tangible asset.

If you do not have a lot of capital to use to begin your real estate investing venture, we could help you in this endeavor. Even people with poor credit can obtain a hard money loan from a reputable lender like Prime Plus Mortgages. Allow us to help you get started with the financing you need. You could be well on your way to making an investment that has real profit generating potential.

Prime Plus Mortgages

Prime Plus Mortgages

Prime Plus Mortgages is a licensed hard money lending company. We specialize in hard money loans, or HMLs, for developers, property flippers and buy-and-hold strategists. HML programs make private money available for small to medium scale projects.

Translate »