How can you spot a “dodgy” investment?

Category: Investment

Earlier this week we highlighted a report looking at another case of investors losing vast sums of money.

They had put money into investments that had little hope of producing the returns being promised to them.

You should always be on the lookout for scams. However, the types of investments we are talking about here inhabit a grey area between being scammed and a worthwhile investment. The investment may be real, but it will not have been set up to benefit the investor.

What should I look out for?

All dodgy investments have one thing in common. They promise high returns for no or very little risk. For many, this has obviously not been the case.

They also tend to invest in a small number of securities or properties. We spread our portfolios across thousands of different holdings around the world.

Another key thing to look out for is your money being locked in for a set period. An investment that you cannot cash in could be virtually worthless to you if you need the money at the wrong time.

Costs and charges are generally either confusing or not declared in dodgy investments. If you cannot understand what the costs are you should reconsider investing.

Does financial advice guarantee suitable investments?

Sadly, this is not the case.

We have seen many cases of financial advice firms recommending, hotel developments, car parking spaces and a variety of other things which have no place in the average investors’ portfolio.

Any advice should draw on a well-articulated philosophy on what works best when investing. This should be based on evidence rather than what suits a sales brochure. It should also start with a robust financial plan.

Do you need some help with deciding how best to invest? Feel free to book a free no-obligation chat here.


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