Mutual funds are great for making financial investments. But there are certain things you should be careful about before making that decision. And one of those most important things are the mutual fund scams. Mutual fund scams tend to make your investment questionable, and you may end up losing your money for that matter. Thus it is necessary to be aware of such scams in advance so that you can remain financially secure.
Now here are some of the mutual fund scams that you should be aware-
The advance fee scheme
In this type of fraud, usually, the scammer pursued their target to make payments upfront so that they can take advantage of it later on by making false promises of proving more amounts on returns. The scammer takes the money in advance, and then the victims never get to hear from them again. Mostly the targets for the scammers, in this case, are those who have already lost some of their money in a risky investment and they reach to such people by promising that they will help them in recovering their losses.
Boiler room scam
Now the boiler room refers to that fake “makeshift” office that is set by a group of people who are scammers but pretend to be not. They make phony company websites and divert their targets to these websites which are very professional looking. They may even have a toll free number to make everything look authentic and authorized. But the truth is that these types of companies don’t exist in reality and are virtual. Everything that they put on the website is false, and as soon as you lose your money to them, they will start hunting for another target leaving you in the middle of everything.
Exempt security scams
The exempted securities usually do not count as scams, but then some people use it for the wrong purpose sometimes. You should be very careful if you get a call from an unknown person offering you a great tip on a promising business which may go public. They may tell things like this particular investment is only for the rich people, but an exception will be made in your case or something similar to that. Make sure that you don’t fall for this trap. Then you will be asked to sign on some documents, and this is where you have to be extremely careful. Do not take any decision in haste.
It is one of the largest financial markets in the world but is also equally risky. Some of those Forex schemes are generally illegal or fraud. Sometimes while investing, you may not be told about how dangerous it can get. In some cases, you are likely to lose all of the money that you spent.
Therefore you need to be very careful while investing in the mutual fund. They can be very risky at times, and every decision you make may affect your financial health in either way.