Know Who You Are Dealing With
He that walketh with wise [men] shall be wise: but a companion of fools shall be destroyed (Proverbs 13:2)
Con-artists often pretend to be someone you trust or a company you do business with. Sincerity is easily faked and has no bearing on the soundness of an investment opportunity.
Don’t Get Greedy
So are the ways of everyone that is greedy of gain; which takes away the life of the owners thereof. (Proverbs 1:19)
Greed can be blinding. Far too many investors have lost everything because they were so preoccupied by the money they thought they were going to make that they missed, or ignored, vital warning signs. Don’t let the promise of future riches blind you to the real dangers or risks that are right in front of you.
Beware of Salespeople Who Prey on Your Fears
The words of the wicked lie in wait for blood, but the mouth of the upright delivers them. (Proverbs 12:6)
Con-artists know that many people struggle with their finances and want a more secure future. Con-artists exploit those concerns an d pressure unsuspecting people into bad decisions. You should never invest out of fear or if you feel pressured. Never trust a salesman who says you ‘must buy now” or offers you a one-time deal.
Never Pay Upfront For a Promise
In all labor there is profit, but mere talk leads only to poverty. (Proverbs 14:23)
Don’t pay for a promise. Many scams require upfront fees for services with no clear measure of performance. These scams include offers for debt relief, credit & loan offers, mortgage assistance, and job placement. Companies offering these services should only be paid after they provide the service.
Do Your Due Diligence
The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty. (Proverbs 21:5)
Clearly understand the investment/business strategy and the market before committing your money. Intelligent investing requires hard work. Before you give someone your money, know the specifics about the business: talk to other professionals in the industry, research the company and the decision makers, and compare them with other similar companies.
Get an Expert Second Opinion
The way of a fool is right in his own eyes, But a wise man is he who listens to counsel. (Proverbs 12:15)
Con-artists want you to make rushed decisions based on your emotions. Slow down and seek guidance from an expert in the industry or someone you trust. Legitimate investments encourage inquiry.
Don’t Be Naive, Question Everything
The naive believe everything, but a wise man looks well into a matter. (Proverb 14:15)
If it sounds too good to be true, it is. Any investment opportunity that claims you’ll receive substantially more than the industry average could be highly risky – and that means you might lose money. Beware of claims that an investment will make “incredible gains” or has “no risk.” These are hallmarks of extreme risk or outright fraud.
Beware of Excessive Use of Flattery
A man that flatters his neighbor spreads a net for his feet. (Proverbs 29:5)
Flattery is a form of “smooth talk” designed to boost your ego and lower your guard. Unscrupulous people will often offer undeserved words of praise to get you to like them and agree with them. Even though we all like to be praised, beware of strangers who offer praise about things they know very little about.
There Are No Guarantees
Do not boast about tomorrow for you do not know what a day may bring forth (Proverb 27:1)
Every investment has some degree of risk. Most fraudsters spend a lot of time convincing investors that extremely high returns are “guaranteed” or “can’t miss.” They try to paint an image of what your life will be like when you are rich to distract you from the true risk. Don’t fall prey to false claims of security.
Learn From Your Mistakes
Like a dog that returns to its vomit, a fool does the same foolish things again and again (Proverbs 26:11)
Einstein defined insanity as “doing the same thing over and over again and expecting different results.” Everyone makes mistakes and sometimes those mistakes can be costly, but no one can afford to repeatedly make the same mistake. If you have been cheated, figure out what you could have done differently to avoid it. Then, make sure you don’t repeat that same mistake in the future.
