Don't be an easy target: Avoid these common investment scams

Scammers are getting more and more creative these days, and they're focusing their attention on senior citizens because they think they're easy targets. But you can protect yourself by getting a quick education in how to identify some of the most common investment fraud schemes. Here are the top three:

Buying and selling distressed real estate

There are actually people who buy distressed properties and flip them for a major profit; it's a sound investment strategy, but only if you know what you're doing. Many seniors make the mistake of trusting scam artists who say they'll do all the work, as long as you give them the necessary money. What usually happens is the senior and the money are forever parted, and no real estate is ever purchased or sold.

Buying or investing in gold

There is an increasingly common investment fraud scheme going around lately that has "gold prospectors" seeking your help to finance a mining expedition, after which you'll get your money back and a cut of the take. Sound too good to be true? That's because it is. Don't fall for this one. Investing in gold is a legitimate investment strategy, but you have to go through the right channels, like a genuine financial advisor and not some huckster who comes along looking for his next victim. Tell him to go pound sand.

Energy investments

Any expert will tell you that investing in energy through legitimate channels can be fraught with risk, but if you throw a scam artist into the mix, you've got the makings of an investment fraud scheme that'll take your retirement stash and throw it away faster than you can say "I should have known better!" If someone approaches you about investing in an energy company and makes pie in the sky promises about making a cool million (or ten), walk away.

Aside from actually being able to identify some of the most popular -- and unfortunately successful -- investment fraud schemes, you've also got to be able to tell if the person or company you're dealing with is on the up and up. Here are a few frequently heard claims that should be a dead giveaway that something is amiss, and that if you fork over your hard earned money you just might not ever see it again.

1. "Guaranteed profit." There's no such thing, and you should know that. If someone claims otherwise, run the other way.
2. "No-risk investment." All investments come with some element of risk. You know you're dealing with a scammer if they promise you there's no chance of losing your money.
3. "Secret information." Anyone coming to you claiming to have the inside scoop on an investment should be looked on with great suspicion.

As always, the best advice for seniors interested in pursuing an investment strategy that will provide a comfortable nest egg is to go through proper channels, like a financial advisor. Even then, don't just select a random financial advisor. Talk to family and friends to see if there's anyone they recommend. Ultimately, good word of mouth is still one of the best ways of finding a trusted financial advisor. Funny how some things don't change.

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