Signs to walk away from questionable investment opportunities

More Filipinos are beginning to understand the benefits of investing and having other forms of passive income. With so many available options in the market, many are exploring investments that offer low risks but high rewards. So, when certain types of investments are advertised as income generating high returns with little to no risk, many are tempted to grab this opportunity.

But if something seems too good to be true, then it probably is. It can be a scam, fraudulent activity, or false advertising that will not give you the returns you expect.

With that in mind, here are some red flags to watch out for and when to say “no” to these supposed investment opportunities.

Guaranteed zero risk and fast returns

No form of investment will guarantee zero risk. Legitimate investments advertised to Filipinos never claim to have zero risk because there will always be some amount of risk associated with investments.

So when someone tells you of an investment that has guaranteed zero risk, there’s a chance that they are fluffing up an investment deal to sound more lucrative.

And when it comes to yields, remember that the higher the risk, the higher the return. So, if you’re being told of an investment that involves low risk and high returns, that’s a red flag on its own.

A good rule of thumb: if it sounds like an absurdly high return, it probably is too good to be true.

Requiring you to recruit to earn

If you are earning more money through recruitment than your actual investment, then this is not an investment–it’s a pyramid scheme. It’s an unsustainable business model where those at the top of the pyramid earn more because the people they recruited got more people into their network.

A pyramid scheme might feel like a lucrative investment at first, but this is not built to last. Eventually, when you stop finding new people to recruit and your network stops recruiting, there is no way for you to earn.

So, if you need to recruit to profit more, this is a red flag. Your profit stops when you stop recruiting.

Rushed to make a decision

The market may be vulnerable to fluctuation, but this is no excuse to rush on a significant investment. A good investment takes time.

Do your research before you make a decision. Legitimate investments are often made with informed experts who can help you decide where to invest.

If you feel pressured or rushed to make a significant investment, it’s always a good decision to walk away. Because there is some risk involved in investments, those who offer investments would understand why you need to do your research first before parting with your money. Someone who offers investments is never aggressive nor uses guilt tactics to make you invest.

‘Everyone is doing it, so you should, too’

Just because everyone is doing it does not mean it is a lucrative investment opportunity. Following the bandwagon is never a good reason to think that something is a good idea.

Do your research on the company rather than accept an investment opportunity at face value just because everyone is throwing their money at something.

Very little information given

Legitimate businesses and investments want to paint you the whole picture before you decide to invest. So, if you happen to stumble upon an investment opportunity that offers very little information, then this is a red flag.

Withholding information like the company name, what it does, or whether or not it is registered with the Securities and Exchange Commission (SEC) is a sign that this investment is shady. If you want to dig deeper, get in touch with the SEC to verify the name and address of the company and the person who does the offer. Get the company landline number to trace back to the name of the owner and, lastly, check if that person or company has the right to offer that kind of investment product.

There are opportunities in investments, but you should be able to spot red flags to avoid being fooled. If an investment is too good to be true, then it is wiser to invest your money elsewhere.

For both new and experienced investors, we suggest investing in a healthy mix of collective investment schemes like UITFs from Metrobank. Whatever your starting amount or level of expertise, there is something for you from our wide array of investment options.

Not sure where to start? Don't worry. We'll be with you every step of the way. Visit your nearest Metrobank branch and let us help you find the investment that will make life more meaningful for you. To learn more about our investment schemes, visit https://metrobank.com.ph/invest.