Avoiding Common Stock Market Scams
It seems that there are more and more scams and dishonest deals
in the news every day... and it may appear that no one is safe.
Many people put off making investments that could make a lot of
money down the road because of the fear of stock market scams,
but with a little bit of care and common sense they don't have
to.
It's possible to easily avoid most stock market scams, if you
take the time to do a little bit of research before making your
investments and avoid the lure of "fast money."
Here are some basic tips that can help you to avoid stock market
scams and keep your money safe and secure while enabling you to
make the investments that you want to make.
Know the Source of Your Information
A common source of stock market scams comes from spam e-mail,
often in the guise of unreleased information or secret stock
tips. Even if the claims in the e-mails or communications were
legitimate, it can be very dangerous to act on any "unreleased"
or "secret" information. Insider trading, or trading made by
those who know about financial news within a company before the
public knows, is illegal, and using insider information as the
basis for your stock trades can get you fined and possibly even
earn you some jail time.
Even though most anonymous e-mail tips don't count as insider
information, it can still be dangerous to act upon any
information that you receive in this manner. If you want sound
stock advice, hire a market analyst or read the financial
sections of major newspapers or websites.
Research the Stocks You Want If you find a stock that seems
interesting but you aren't sure if it's legitimate, take the
time to do a little bit of research on both the company that
issued the stock and the performance of the stock in the market.
Most financial websites offer free stock tracking and
performance histories, so take advantage of the information
available to you and know what you might be getting yourself
into. If you aren't able to find much information on a stock
that seems like a great deal, remember the old adage that if
something seems too good to be true then it probably is. When
dealing with stocks that may not be legitimate, it's usually
better to err on the side of caution.
Find a Broker You Can Trust Many people are afraid to invest in
the stock market because they're afraid that they'll be scammed
by a fraudulent stock broker. In order to avoid this, take a
little bit of time to find a broker that you know that you can
trust. Ask the advice of people who you know and trust, or
failing that take some time and research brokerage firms in your
area.
Another alternative is taking the time to look at online
brokerages, finding those that have been reviewed positively by
trusted financial and news websites.
Keep an Eye on Your Investments
One of the best ways to make sure that you don't fall victim to
a stock scam is to make sure that you keep a tight watch over
your investments. Periodically check the progress of your
investments, making notes and inquiries about anything that
doesn't seem right about your chosen stocks and bonds.
This will also help you to identify when it's time to buy more
shares or sell the ones that you have, and can assist you in
learning which stocks and bonds are worth the trouble and which
aren't.
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