Fraudulent investments can be a serious problem in Australia, and individuals with a high net worth are often targeted in these scams.

Some investment scams in the past few years have been extremely sophisticated, and have managed to fool seasoned investors. Here are some things that should raise a red flag in a prospective investment opportunity:

BLOG: Identifying investment scams

Website only

If an investment opportunity is presented to you online, you should do a significant amount of research to determine that there is a legitimate organisation behind it. If a company is legitimate then they will have a valid Australian Financial Services Licence (AFSL).

Too good to be true

If the returns that you are being promised on an investment sound too good to be true then there is a good chance that they are.

Cold calls

Receiving a cold call with an investment offer should raise your suspicions instantly. Organisations with legitimate investment opportunities usually do not need to resort to cold calling.

No risk

Any investment offer that claims to be risk free should be treated with caution. Even the most stable investment options carry a small amount of risk, and no respectable professional should claim an option is risk free.

Pressure to act

Sales people who pressure you to make an investment decision fast, for example by telling you that the opportunity will expire quickly, should be treated with caution. It is possible that they are trying to prevent you from conducting independent research.

You should never feel pressured to make a hasty decision regarding any kind of investment.