In making investment decisions, the ability to identify unworkable schemes or even outright scams is crucial. If you have the skills and techniques to identify these things, then you are well on your way to making an excellent investor. The stakes couldn’t be higher.

Some investors will use their life savings in a last chance effort and if they get this decision wrong or become victims of a scam, then the repercussions for them and their families can be quite dire. This article aims to highlight some of the warning signs that investors can look to assess whether they are making the right decision.

How to Spot the Bad Apple ?

1. Good investment adviser will be able to provide real proofs and track records of generating profits ! Thus, you as the investor needs to be vigilant in terms of checking the paperwork that accompanies any proposal. If a scheme is based on pure word of mouth and no one is willing to provide documentary evidence of the scheme then you are probably onto a loser. You need to get out fast before you get fleeced by them.



2. Investment opportunities that have a history of failure are a no go area of the wise investor. This is particularly true if the investment is doing the same things that it was doing before. Logically thinking about it, there is no reason to follow a failed scheme.
3. If the scheme looks unrealistic then it probably is. The secret is to ensure that you are not blinded by greed for success so that you fail to spot the obvious signs of a dud scheme.
4. Schemes that tend to underplay the risks involved in making a profit are on balance not well thought out. You should always operate on the basic principle that in order to make a profit you have to have a risk. If the investment prospect does not give any indication of the risks involved, then you need to stay away.
5. Where the investment opportunity is unpopular with other investors, you will need to do some research and find out the reasons for its unpopularity. These reasons might indicate to you in the simplest terms why it is not a good idea to continue with the scheme. It might be that the scheme is unpopular because it has not been well marketed but in any case you will need to ascertain its true status.
6. Do not jump into very large investment schemes without doing real research about the people involved. The higher the amounts of money involved, the bigger the stakes for all investors. Unless you are prepared to give away free money, do not invest if they want to get you to invest bulk amounts of money without any explanation.
7. Likewise avoid those schemes that tend to offer very little investment opportunities in terms of the value of amounts requested. If the money requested is too low then it might be good indicator that you are giving away money rather than investing it.

In conclusion I would argue that this is not a bible for investors but rather a snapshot of some of the obvious signs that an investment opportunity is not as good as it seems.