Trusting someone with your hard-earned money while you plan for retirement can feel overwhelming. Yet in order to prepare for the future, you must be willing to invest. Sadly, there are many investment frauds and scams that prey upon those preparing for their retirement. If you aren’t aware of what to watch for, you could end up losing all of your money. Here are some common investment scams to watch for as you look for a place to put your money.

Risk-Free Investment Scams

Investment always carries a risk. No matter how carefully you plan, you do risk losing money if you invest money. Now, the right investment team will help keep this risk in a reasonable range for your stage of life, but here will be risk.

A risk-free investment scam is an investment that guarantees a return. No investment venue can do this. While the scam itself may vary, these are often situations where the investment company will take your money and run, disappearing without giving you back a dime.

Wining and Dining Investors

One scam uses high-pressure sales tactics alongside a fancy, free meal to pressure people into investing where they are not ready to invest. These scams offer a free meal seminar advertised as informational. At the meeting, in addition to the fancy meal, the presenter pitches an investment product. While the product may be a legitimate investment, it may not fit the needs of the attendees.

In this scenario, the presenter will use high-pressure sales tactics to encourage investors to make a decision on the spot. They are presented with an investment decision they must make right now. Avoid this scam by always taking time between a presentation and deciding to buy an investment to do a little research and make sure the investment is the right fit for your needs.

Foreign Market Investment Scams

Foreign market investment scams fall into two basic categories. The foreign exchange market, or Forex, is the subject of the first type of foreign investment scam. The fraudster will put an ad in a local paper or somewhere online, offering an excellent, high-return investment opportunity in the Forex market. You invest your money, and the fraudster runs with it. While some may invest, they do not disclose that these investments carry a high level of risk, which is probably not what you are looking for in your retirement investment accounts.

Offshore investment scams are similar. Again, the fraudster will promise a high rate of return and, in this case, the ability to avoid taxes. You send your money to an offshore account, and at that point, you have little recourse to get it back because it’s no longer in the United States. You can even end up with tax penalties in the country where you invest if there is any investment made in the first place.

Cryptocurrency Scams

Cryptocurrency is a newer type of investment that is popular with some victims because it seems modern and high-tech. Cryptocurrency can be a legitimate investment venue, but cryptocurrency scams promise more than they can deliver. They promise high returns and low-risk investments, but the reality is that this type of investment is quite risky. It also has many options for people to steal through shiny, professional-looking websites filled with technical jargon.

Pyramid Schemes

Pyramid schemes, also sometimes called Ponzi schemes, are not new, but fraudsters are getting better at hiding this structure. In this structure, investors earn money by bringing in new investors. Eventually, the pool of available investors dies out, and the pyramid collapses. While some people will make income from this structure, most people, particularly those at the bottom, will lose everything. If the investors don’t have new investors coming up through the ranks, the pyramid loses the ability to pay its investors. The key way to spot this scam is to note that there is no underlying product or company being bought and sold. Investors make money from others' investments.

Annuities Fraud

Through annuities, investors can buy insurance products with an upfront premium and then the promise of a payout 10 to 20 years later. For young investors, annuities can work well. However,r older investors can suffer with this investment structure because the 10 to 20-year period may not end until after the investor’s death. For this reason, asking older investors to purchase annuities is a type of fraud.

How to Avoid Becoming a Victim

Frauds are common, with fraudsters particularly targeting those ages 50 and older. To avoid falling victim to a fraudster, first, learn to spot and avoid red flags. Some common red flags include:

• Lack of government oversight
• Promise of a guaranteed investment
• Promise of a high-yield investment
• International investments
• Promise of little to no risk
• Investments with no physical product or an actual company being invested in

In addition, finding trusted advisors is critical. Finding a fiduciary financial advisor is helpful, as these are legally required to prioritize the needs and goals of their clients. Check for an advisor with adequate credentials, such as an Accredited Asset Management Specialist, Chartered Retirement Planning Counselor, or Certified Financial Planner status. Make sure to check with the bodies that issue these accreditations to ensure the investor is actually certified. You can also ask for a Client Relationship Summary from the investment firm, which will outline their fees and services. Finally, look at the Better Business Bureau for any reviews about the company to ensure they are a legitimate investment firm.

Remember, fraudsters are excellent at setting up flashy, convincing websites and using the right terms and high-pressure tactics to convince you that they are legitimate. If something seems too good to be true, it probably is, and you would be better served investing your money elsewhere. Fraud and scams are common, but you can be safe if you invest smart.

Remember, you’ve worked hard for your money. You deserve to know that it’s being protected. Watch for scams and red flags, and find a trustworthy advisor, and you will be able to protect your assets.