DETECTING SCAM INVESTMENT
We need to be careful before deciding to invest in a business. We are investing hoping profit in the future, instead of being trapped in problems. The main principle of evaluating a business proposal is Risk Handling. Identify the risks and analyze how those risks will be managed. If you are good at managing the risk, the profit will follow. The following things need to be done before you are deciding to invest:
Check the track record of the person / company / institution which will run the business
Check the legal aspect first! it is to anticipate if a dispute happens in the future you will save from the legal aspect. After legal, check the historical performance of the business you want to invest in at least for more than one year. You can compare the business projection to the actual performance in recent years. Usually, a business proposal is arranged as interesting as possible to be funded by Investor. Be careful with bombastic easy money advertisements!.
Check the proposed risk management
You have to know the risks of the business, if you are not sure, ask the experts on the field of the business. Make sure that the worst-case / risk is already anticipated, also see how your involvement to anticipate the risks.
Business is not just about profit sharing, it should be clear if the business is at a loss. Check how far you have to pay the loss. Don’t ever believe if you are told that the business always profits and never losses, it is a scam. Many problems started from here, investors always thinking about profit forgetting the risk.
Risk to rewards ratio
After evaluating the risks, Check the offered rewards. Try to think as rationally as possible. Rember the principle high return — high risk. If you are offered a bombastic profit in a short time easily, be careful. Greed will kick you badly. If you are considering investing in the high-return business, make sure you are ready for the risk. You must understand the fair level of the profit for the business, ask the expert if you are not sure.
Make sure you are being paid
Profit is profit if the money is in your hand. Check other investors, are they being paid fairly?.
I hope what I am sharing can help you to choose the best and suitable investment for you. Good luck!.