Few tips to secure investments

Johannesburg – The recent FinTok craze on social media platform TikTok has opened the door for scammers and fraudsters to take advantage of unsuspecting users who source financial advice online.

As a young investor, the biggest advantage you have is time. By starting legitimate investments at an early age, you can benefit from the power of compounding and time in the market, building real, lasting wealth. Here are six tips to scam-proof your investment approach and advise on what to look out for when considering a new investment.

1. An investment that requires you to recruit new investors in order to realise the return on your investment is a pyramid scheme. Be wary of tiered investments that classify investors or have multiple levels, such as bronze, silver, gold, platinum and diamond.

2. If you don’t understand how an investment product generates its returns and there are no clear underlying assets you should be cautious.

3. Fraudsters want to create a sense of urgency to limit the amount of time you spend researching the potential investment. Anything sold as a oncein- a-lifetime opportunity should be avoided.

4. Consider financial service providers with decent track records. Most scams will promise great returns without a solid track record to back them up.

5. If the investment is not registered with a mainstream financial body, like the Financial Sector Conduct Authority, it is not regulated.

6. The adage still applies: If it seems too good to be true, then it probably is. Trust your gut. Always consider expert advice.

By Nomi Bodlani. 

• Bodlani works for Allan Gray.

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