In the past 3 years, over 7,000 Australians have lost at least $500 million to financial scams. It is important to understand that at some time you will be invited to join in an investment scam. The invitation may be a phone call offering little known shares that are about to take off. It could be from a friend, work colleague or someone in a social or church group inviting you to attend a meeting or seminar.  

Given the amount of money lost, scams must appear very attractive. Often the scams last a number of years and in fact do pay returns as originally outlined. This of course is part of the scam. Get you in, gain your confidence so that you will invest more and tell many people about this wonderful opportunity. Then wham! It's gone and you lose everything!   

How do you spot scams? Here are 5 clues that may indicate a scam:

Scams always offer a higher return than genuine investments. They are known to offer anything between 20% per year to 400% per year! Compare this to investing in shares which over the long term has averaged about 8% per annum!

Scams almost always say financial success is easy and risk isn't a problem. If that was the case why isn't everyone wealthy? To become wealthy requires time spent on researching appropriate investments, investigating them and making a decision to invest or not.

Often investment scams promote something special about a particular investment. It could be they have inside information or usually only available to the very wealthy however we are offering this to a select few! This makes us feel special.

It is usually something that is only available for a short period of time so that you don't have time to talk to someone about it or research it further.

Many scams are offered by a stranger. It could be the invitation comes from someone you know, however the promoter of the scams rarely has any real credentials. They don't have a licence to sell these investments. The investments themselves have no real financial data.

The key to ensuring you don't get caught is to educate yourself about investing. Use common sense to remind yourself that this proposal sounds too good to be true. Have the confidence to say no, even when people we know say yes and initially the venture may be doing well!