One way that people fall into personal insolvency is by losing money through investment scams. Every year thousands of Australians lose millions of dollars to investment scams operating here and overseas. In Queensland alone there are currently about 320,000 fraud related complaints reported to police that have not been investigated.

For Consumer Fraud Week 2016, ASIC has highlighted that the amount of money lost through fraudulent investment schemes actually doubled last year to over $24 million. So how are people still being fooled, and what can be done about it to ensure longevity of funds?

How can you discern if an investment opportunity is a scam?How can you discern if an investment opportunity is a scam?

What draws people in?

There are many carrots that tend to draw people into making investments when the scheme is actually a scam. ASIC reports that some of the most common are:

  • Speedy and high returns on the initial investment
  • Rewards that are disproportionate to the requested deposit
  • Software or professionals that claim to be able to predict the market
  • Schemes with guaranteed results, or that state they are have low or zero risk

How can you make sure your investments don't mean you'll end up needing to consider your personal insolvency solutions?

Since the Reserve Bank of Australia cut the cash rate to the record low of 1.75 per cent, many people will be looking at investing their money to grow wealth. Considering that investment scammers work with very professional-sounding scripts and offers, how can you make sure your investments don't mean you'll end up needing to consider your personal insolvency solutions?

Keeping yourself safe

One of the easiest ways to protect your funds from being invested in a scam is to check up on credentials. ASIC has professional registers, in which you can check for an Australian Financial Services Licence or Australian Credit Licence.

If the company managing the potential investment is not listed here, then you should cease engagement with their representative. If you are emailed or called about such an opportunity, ASIC says asking for the company's address or the name of the owner is also an excellent way to determine whether it may be an investment scam. 

Nobody wants to end up needing bankruptcy advice, but unfortunately it is something that happens to many Australians. When it comes to structuring your finances and protecting assets, Cactus Consulting can offer advice and solutions so you stay financially stable. 

Posted on 09-06-16 in Money management and bankruptcy, Personal finance insights and updates.