Investments scams are a lot of common these days. This is due to the popularity of the internet that makes anonymous communication easier. Investment scams typically entail bringing an individual invest his hard-earned money in a fraudulent investment scheme which then results to losing money to the scammers. This really sucks especially for those people who have little money to start off. To protect yourself from these nasty evil scammers, you really should do a lot of research about the company and the investment before you throw your money in. To get started, here are the top 5 investment scams you should learn about.

1. Ponzi or Pyramid Scheme

This scam has tapped off a lot of money from innocent people for years. The scammers start off with an advertisement or promotional materials which promises that your $10 investment can turn to $500 or more in just a week. This fraudulent offer reaches people thru email, or referrals from any person you know, even from your closest friend (That’s sad).

This kind of scam establishes hierarchy among set of people in pyramid style in which the first investors are at the top. These people receive payout from the money invested by the later investor. When the person is pleased, he/she usually invest more money into it, or find "invites" such as family and friends to also invest so that the people in the pyramid move rank.

When the investment losses its steam, this means that no new investors are taking the bait. The scammers then stop paying money to the investors then take off with the money they got. Goodbye money.

2. Advance Payment Scheme

This scam involves the victim paying an upfront payment that offers a significant return. After some time, the person doesn’t receive any money and the scammer just suddenly goes away without much of a trace.

This type of scam usually targets people who have lost their money to an investment. Scammers contact these persons to help them recover their losses. They may induce the person by saying that they will buy that person's investment for profit, but first he or she must pay a refundable fee or deposit. After collecting payments, the scammers disappear like a wind.

3. Boiler Room Scam

This is highly technical type of scam. It usually involves a large number of people and lots of preparation. What they do here is set up a makeshift office called “boiler room” that must look very legitimate. They also set-up a website, toll free number, and an address to make it more legit and professional.

But the truth is, the company doesn’t exist. All information, including the website and address, are fake. The office is just a temporary place. By the time the person realizes the mistake he made, the office has closed up and moved to other place to start another boiler room again.

4. Pension Scam

This scam usually involves non-withdrawable retirement savings. You cannot withdraw money in this account until you reach the retirement age usually around 60s. The scam is often promoted in ads as a special “RRSP loan” that lets you get around the tax laws and tap into your locked-in funds.

To avail the loan, you must sell the investment you hold in your savings and use the money to buy shares of a start-up company that the promoter is selling. With that, the promoter allows you to loan around 70% of the money you invested, while the rest are for fees. In exchange, you are promised that you’ll get your cash at early stage, pay no tax, and still hold a valuable investment. But the truth is the investment you bought is worthless, and you lose your entire retirement savings with it. Scammers!!

5. Investment Seminars Scam

This is quite a popular scam nowadays. Investment seminar can be a scam as only the presentors benefit from it, while the registered members are left with nothing, or if there is, false information. Most investment seminars have this get rich scheme which mostly do not apply to the masses. To get rich, you mostly need capital, idea, strategy, and detailed execution. As the competition is really tight and dominance is power, strategists usually do not share ideas and techniques openly in the business world.

Remember these 4 signs of scam

1. high return, low risk
2. Insider information
3. pressure to buy now
4. seller not registered

It is very important to do a lot of research when entering an investment, especially if it involves large amount of money. Remember, you are risking your “hard-earned money" here, and scammers surely love those money of yours to be in their hands. So, invest wisely and stay safe everyone.

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