The signs of a bad investment can be hard to spot, and it’s even harder not to get tricked. With so many scams out there, it’s critical for investors to be able to identify the red flags that signify an unhealthy business or investment opportunity.
In this blog post, we will discuss 15 red flags in investments and how you can avoid being scammed by these common pitfalls. But first, let’s cover the basics.
What is an investment?
An investment is a purchase of an asset, such as stocks or bonds. Investments are often made with the expectation that they will generate income and/or capital appreciation over time through their ownership in these assets.
An investor should feel confident about his investments without feeling like he’s taking too much risk for what could happen if things go wrong.
This means being able not only to protect your principal but also to earn some money on top. If you’re looking at investing opportunities where there isn’t enough protection against loss (like high-risk mutual funds), then chances might seem good now because returns may have been great recently – however when markets turn sour again those investors who were relying solely upon luck.
Why you should avoid bad investments
You might not be able to get your money back when you need it. – Your investments could lose value over time, and even go bankrupt if the company goes under or is unable to pay its debts.
How to get out of bad investments
You should always have a strategy for getting out of bad investments, and that means having an emergency fund to cover your expenses in the event you need it.
You can also sell some assets or use credit cards if necessary, but don’t forget about penalties on those loans! If all else fails (and this is really only recommended as a last resort), then bankruptcy might be one way forward.
But before considering any drastic measures make sure first what type of debt relief options will work best given where things stand now financially speaking.
15 Red Flags in Investments
00:45 – The numbers don’t work
01:24 – You don’t understand what you’re investing in
02:02 – You don’t know the person you’re investing in
02:41 – The other party has no skin in the game
03:32 – All buzz, no substance
05:08 – “Risk-Free” & “Guaranteed Returns” investment opportunities
05:55 – Less educated people are talking about it and investing in it
07:09 – You need to borrow money to get in
07:53 – The team is replace-able
08:34 – You can’t change the end result yourself
09:59 – Sounds too good to be true
10:46 – Playing short term games
11:29 – Not understanding and paying attention to the marketplace
12:16 – Lack of paperwork
12:55 – Unable to easily liquidate