When it comes to making money to give you and your family a safety blanket in the future, investing is a great way to do it. Whether you choose to go for stocks and shares or you take the plunge and buy a house to rent out, there are lots of options. But anywhere where there is money there are also fraudsters, and you need to be on your guard to defend against possible investment traps. Here’s how to do it.
The wrong asset class
Before exploring some of the more sinister traps you might face when investing, it’s worth pointing out first that sometimes the trap may be staring you right in the face. If you’re thinking of making an investment in a particular asset class, you need to first be sure that you’re choosing the right one. Falling into the trap of choosing a particular asset class when it isn’t actually right for you is surprisingly common – and best guarded against.
Take the example of buying a property to rent out to tenants. Often, this is seen as a wise investment due to several tropes about the property market, such as “Bricks and mortar are valuable” or “Property prices never go down”. But if you’re looking for a hands-off investment, it’s actually a bad idea as it often requires considerable time and cash spent on maintenance, renovations and more. Perhaps a tracker fund or other low-time investment would work better. For that reason, you should always thoroughly investigate any investment opportunity before you proceed with it in order to ensure that it’s the right one for your needs.
Fraud and crime
Once you’ve found your preferred asset class and you know it is right for you, the next step is to do your research before going ahead. First off, it’s worth checking out your broker. As this OctaFX review shows, there are plenty of good brokers out there. But there are unfortunately still some unscrupulous providers who are out to defraud you of your cash.
Before you proceed with a broker or other investment opportunity, you should always check that it is registered with the Financial Conduct Authority. Don’t forget that if an opportunity to make an investment looks too good to be true, sadly it probably is – meaning that you should think twice before you proceed with it. If you’re in doubt at any stage, ask the broker or provider to give you some more information about what the investment entails: if they are willing to provide accurate, backed-up and neutral information which doesn’t promise the earth, you’re more likely to be on solid ground.
The world of investment is a tricky one. It’s one that can provide great wealth while also running the risk of cons and fraud. By thinking carefully about what asset class you need and whether fraud and crime are risks, you’ll be able to defend yourself against the problems that this industry can pose.
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