How to Spot Investment Scams

Everyone wants to make more money, and an opportunity to invest in something profitable may sound like a great way to do it without having to work hard. Most financial coaches, educators, and advisors would agree that growing your money through investing is one way to achieve financial freedom.  However, you need to investigate any investment opportunity very carefully before putting your hard earned money into it.

In the Philippines, investment scams are a special kind of fraud in which individuals pose as investment brokers or financial advisers  and try to get you to turn your money over to them. You must know the signs to watch out for when suspecting a scam. Hence, you need to know how to investigate offers and respond to suspected fraud.

I think, every year, thousands of people in our country lose millions of pesos due to scams. Nonetheless, we have the best weapon to combat scam, and that is through financial education. Today, I will be giving you some tips on how to spot investments scams.

1. An investment scam promises guaranteed return with NO risk.

If someone promises you an investment without risk, tell this to yourself over and over as they go on with their sales talk: “You are getting scammed.” It should be noted that investing is a long-term process. It is not about becoming rich overnight. It’s about building your portfolio for a long period of time and managing risk along the way. Remember that all investments carry risks. Beware of investments that offer high returns at little or no risk. If they offer you a monthly guaranteed return, dear friend, it’s best for you to run the other way and stop entertaining them. My advice is to always consider “guaranteed return” as a red flag.

Many investment scams offer lucrative promises to lure investors in, commonly targeting newbie investors. Do avoid investments that offer promises that seem too good to be true. To encourage you invest, they may show you a history of returns. If you see results that claim to be positive month after month, and quarter after quarter, you should be skeptical. Even the best investors in the Philippines experience some ups and downs. Don’t enter into quick, easy, and risk-free investments.

2. An investment scam only earns from Recruitment and Membership Fee.

“Open-minded ka ba?” Sounds familiar right? These are the usual words we can hear from the people who invite us.

One type of fraud takes the shape of networking schemes that rely on the number of recruits you introduce to the business. This is most commonly known as ‘pyramiding scam.’ It’s a scheme where profits are taken from the payments of recruits and not from the actual sale of products and services.  If you will examine this scheme, it all boils down to an endless chain of recruitment. You can make money by inviting others into the program and letting the recruits do same. They will be required to pay a certain amount and all you have to do is invite as many guests as you can to earn.

I’m not saying that all networking companies are scams. But if you haven’t been getting your pay check, then maybe it’s time to accept that you’re not getting it at all. Sad to say, my friend, you’ve been scammed!

3. An investment scam jumps into the Bandwagon – Everyone is doing it so it’s Legit!

Photo: corridorcomms

I would agree that the bandwagon effect can be a problem. Do not allow yourself to be easily swayed by the majority. Also, do not believe quickly to their successful claims nor be overwhelmed by impressively articulate sales talk from randoms. Remember, scammers are well-trained. Presumably, they done their speech a thousand times before so it’s bound to sound professional and excellent.

You have to keep your own counsel and be open to attend financial literacy seminars. Indeed, you need to invest in yourself first because investment in knowledge always pays the best interest. As what Benjamin Franklin said, “There’s always power in education!”

4. An investment scam has Fictitious/never-heard-before track records.


Investment scams often claim to be well-established in order to gain your trust. They may claim to have many years of experience and make large profit out of their investments. In like manner, they use fake testimonials of “satisfied investors” to shore up their credibility. If you can’t find the investment company online, chances are high that it’s a scam.

The secret is to do your own research. Verify the investment company’s registered name online, check it with the PIFA (Philippine Investment Funds Association), or click the mutual fund icon below homepage. Make sure you also get an advice from a credible financial advisor. There’s no such thing as too careful, especially when a lot of money is at stake.

Do not be pressured to hand over money or sign any investment deal right then and there. You can conduct a background research first before you decide where to place your hard-earned money. If the firm is reputable, then it should have a name you can recognize or a history you can trace. If you cannot track the company or the individual broker’s history, you should be extra cautious.


Examine and study the investment proposal, the Securities and Exchange Commission (SEC) said. To know more about their checklist on how to protect yourself and your money against investment fraud, please click this link

Some investment scams may even claim to be regulated by the relevant authorities to mislead you. Check on the company, its owners, directors and management members, and the investment opportunity. Doing so will help you to assess if the investment opportunity is genuine. Ask someone you trust to help you with your checks if necessary. You can also send us a message here, directly contact us at 0917-117-1770, or set an appointment for FREE so we can assist you personally.  Always arm yourself with information. Likewise, learn to spot the red flags of investment fraud so you can protect yourself and your loved ones.


About the Author:


He is a graduate of Pamantasan ng Lungsod ng Valenzuela with a degree of Bachelor of Science in Business Administration major in Financial Management. “EJ” works as an Internal Auditor of Northeast Grillery Ventures Incorporated and a Managing Head of Garvilim Foods Incorporated. He is also a part-time Financial Educator at International Marketing Group (IMG) Wealth Academy.

In 2018, IMG awarded him as a Senior Marketing Director during its Annual Convention held in Macau. He is also an entrepreneur, and investor in Mutual Funds, Healthcare and Insurances because he believes in building a solid financial foundation. One of his goals is to become a CEO at 25 and to retire at a young age. He believes that there is no limit in achieving your dreams as long as you have a great vision and discipline to pursue them. 

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