Online Fraud has destroyed many people's lives.

The advent of the internet has changed the way we do commerce. Commodities can be bought and sold with the click of a button, with money being transferred instantaneously over channels that are as invisible as they are ubiquitous. In addition to convenience, online investing gives us access to markets previously only available through brokerage firms and middlemen. Investors are given far more power, able to make decisions on their own without having to pay for expensive commissions. Unfortunately, this freedom also comes with a price, as scam artists flock to the internet to take advantage of electronic money transfers and looser regulations. Every year over 125,000 victims report losses due to cyber theft, losing investments of more than $100 million.

Online Trading Scams

In the past, a scam artist looking to set up a brokerage scam would require a lot of effort. They would need to set up a fake office, purchase supplies, and put on a show for a prospective mark. This could only be profitable if the client was looking to invest heavily, and even then the very idea seems more like a farfetched movie concept than an actual scam. However, on the internet, constructing a legitimate looking website is far easier. Money transfers can be sent electronically to anonymous bank accounts overseas. The rise in online trading scams has made it incumbent on all investors to check and verify if a trading firm is approved and regulated by the SEC.

Email and 419 Scams

Other scams require neither investment into stocks, annuities, or other traditional methods of trading. In recent years more basic cons like Nigerian 419 scams have become popular on the internet. Usually these scams begin with an email from a supposed member of Nigerian royalty, asking for funds to help them access their lavish fortune, part of which they promise to their generous benefactor. In reality many of these Nigerian kings are scam artists hoping to use the internet to take advantage of gullible westerners. Investors should make a habit of deleting all unsolicited emails to avoid being ensnared in these types of scams.

Investing in Real Estate is more secure when done for a long term return.

For most individuals, the purchase of a home is a significant step in their lives. A home is more than just a place to live, it’s a sanctuary from the noise, a collection of memories, a place where family comes together. Yet beyond the emotional significance, a home is also a valuable piece of property, and a vital component of your investment portfolio. Its value can increase dramatically over time, and if it is the primary place of residence, it can be sold without incurring a capital gains tax. The value of real estate pushes many investors to not only buy a home for personal use, but invest in a second home to be used as a fungible commodity. Unfortunately, the popularity of real estate purchases also attracts scam artists, many of whom attempt to sell bogus properties to individuals hungry to invest.

Mortgage Refinancing

Individuals looking to refinance their home can be fooled by an extremely low rate. These rates are often offered up by scam artists who request an upfront processing fee before disappearing. Other fraudulent tactics include promising a low fixed rate mortgage when in actuality the interest is variable. Before refinancing your home or taking out a home equity loan, peruse the details meticulously and do not take any loan offers from an unsolicited caller.

Real Estate Scams

Some individuals may be looking to invest not in a home for themselves, but a secondary property or apartment building to lease. In order to attract prospective buyers, sellers may fudge the amount of profit being earned from their tenants, quoting high returns on the internet. These profits are generally best case scenario figures, and prospective buyers should request detailed financial records of the last two to four years regarding tenant income, building expenses and turnover. Buildings should be inspected to ensure no renovation or electrical upgrades are required. Ask the previous owner why they are selling. After all, if a certain building were really that profitable, there would be no reason to sell.
Another common scam is selling real estate over the internet. These are generally targeted at individuals looking for a cheap property to invest in but live outside the state it resides in. The scammer sends pictures of the property and stresses the urgency of buying now. Unable to inspect the property, the buyer transfers over the assets on good faith. However, the pictures turn out to be stock footage of an unknown house.

Planning Your Retirement requires a lot of effort, but it will pay off!

One of the most critical elements to investment planning is saving for retirement. Most individuals, after all, neither want nor are capable of working their entire lives. Furthermore, the increases in life expectancy make planning for retirement all the more urgent even for those entering the workforce for the first time. However, saving the money for a future that seems far off is difficult given the necessities of the present. Thankfully, many retirement investment vehicles are full of incentives to motivate individuals to start saving right away.
Traditional and Roth IRATraditional IRA’s provide workers with a way to defer their tax liability until they retire. For those who make more income now than they will in the future, contributing to a tax-deferred traditional IRA makes sense. For individuals who currently make a low annual income, investing in an after tax or Roth IRA will allow them to withdraw that money tax free when they retire.

Employer Sponsored 401

kAnother strong strategy for retirement planning is an employer sponsored 401k. These plans typically match any contribution up to a specific dollar amount, in effect increasing your overall pay. Failure to take advantage of a 401k can be a fatal mistake for most young workers rapt with the desire to spend now. Some insist that a company 401k makes little sense for a job that is only temporary. However, individuals who leave a company can easily roll their 401k over into an IRA.

Retirement Scams

Many retirees have grown a considerable nest egg but did not account for the increase in life expectancy or rise in inflation. Suddenly they are forced to live far more frugally in order to survive. In order to escape this financial pressure, many are lured into attending get rich quick seminars and other scams that promise high and immediate returns. These seminars are usually headed by a prominent trader but done outside the legal parameters of the SEC. Retirees should be wary of any seminar that makes such lucrative promises as they could be part of a more elaborate Ponzi scheme.

Mutual Funds can be a very safe way to long terminvesting

By bundling together a diverse portfolio of stocks and bonds, mutual funds provide customers with a relatively safe and professionally managed investment vehicle. Most companies offer mutual funds in a variety of investment types, from strictly bond funds to international stocks to tax-free investments in your state. Mutual fund companies also provide you the option of investing in a personal account, a 529 college savings plan, and a tax-free or tax-deferred IRA. However, not all mutual funds are managed properly, and some charge inordinately high fees. With more mutual funds being offered today than actual stocks, choosing the right mutual fund often requires more research than any other investment strategy.

Broker Commissions

Outside investments of a million dollars or more, mutual funds typically come with a sales charge. Often times mutual fund companies will only list return figures based on net asset value, and not the value after the sales load is applied. This load is generally about 5 to 6% of the total cost. Therefore even a healthy return of 8% in the first year is immediately cut down to nearly zero after inflation. While over the long term the effect of the load is negligible, some unscrupulous brokers will suggest the client sell the fund in order to gain a commission, constantly undercutting the total return.

Management Fees

Up to 2% of the total gain goes directly to management fees. Typically, users are willing to pay this price in order to have their portfolios managed by a professional. However, some companies will charge fees much higher than the industry standard. Other fund managers will trigger large sales that may result in a capital gains tax, even if the overall mutual fund is losing money to give the perception that the fund is profitable.
Before investing in a mutual fund, be sure to thoroughly examine the prospectus. Verify the sales charge on both front-end and back-end load funds, as well as the applicable management fees. A seemingly well performing fund may actually provide poor returns if these fees and charges are taken into account.

Investing in the stock market can be complex. Consulting a professional is always recommended.

One of the quickest ways to earn and grow your capital is the stock market. Despite being the most volatile of investment types, it is also the most lucrative. Stocks are also flexible. Individuals can purchase stock in a company they believe is on the rise, or short sell a stock when they believe the price will fall. As the stock market is sensitive to even the slightest changes, however, it can often be an ideal mechanism for defrauders looking to earn a quick buck.

Inflating a Stock Price

One of the most scandalous stock practices is artificial inflation. Many financial experts working in the media will purchase a stock and deliberately tout it the following day, causing an influx of buyers and artificially raising the price. The expert can either sell shares he purchased in advance or short sell the inflated position to make a profit when the stock eventually returns to its regular value. Although there are plenty of legitimate financial advisers in the media, the onus is on the individual to research what they read and hear to ensure the tips are valid.

Buying on Margin

Brokers earn money on commission regardless of whether the stock you purchase goes up or down. The higher the initial investment, the larger the commission. An unscrupulous broker might attempt to squeeze as much money from this initial investment as possible by suggesting you purchase a stock on margin. In this case, margin is simply a fancy word for loan. The problem with margin trading is that broker is often not motivated by potential of the stock, but the higher commission amount. If the price plummets, you may not only lose all the money you invested, but be forced to pay additional costs to cover the loan.

Penny Stocks

Another common method scammers employ is marketing penny stocks. These stocks promise huge risk and return for even the slightest movement, and are generally associated with smaller, relatively unknown startups hoping to make it big. The stocks marketed by scammers, however, are for companies that are set up for the sole reason of taking advantage of the market. After recruiting a flock of investors, the price is driven up, at which point the scammer sells. The stock eventually plummets, leaving the investors with nothing.