Pension: Jordan Gillies share tips on planning and investing
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In the digital age there are countless ways for scammers to seem incredibly genuine, and when it comes to investing, these online scams resulted in £50million lost in 2018. While investing may seem like a minefield to a beginner, there are definitive red flags and pitfalls to avoid at all costs.
The first, as Mr Komolafe indicated, is moving too quickly through the phases of research before an investment.
“There is so much information saying you should be doing this now, this is the opportunity right now,” he said, during an exclusive interview with Express.co.uk.
“It feels as though if I don’t do it now, I’m going to miss out.
“The stock market is always going to be there, investing opportunities are always going to be there.”
Not understanding the risks associated with certain investments is a big pitfall that many find themselves accidentally slipping into.
“Often times when it comes to money, we think about what we gain not what we have to lose.
“There’s not enough conversation around risk, social media highlights the rewards.
“Most people don’t want to know you could lose money until they lose money and realise, ‘I wish someone had told me this’.”
Along with this, Mr Komolafe warned against social media as a whole:
“Question what you’re following on social media.”
Social media is a big influence for many first-time investors, and it’s vital to keep in mind the reality behind what one is viewing and see the bigger picture.
Aiming for big, quick returns is going to send an investor down the wrong path in terms of research and ultimately what social media will promote to them, he warned.
Mr Komolafe commented: “That mindset essentially puts you in front of content or trading schemes that are only there to tell you what you want to hear and reaffirm the idea that you already have.”
Mr Komolafe also advised that when an investment opportunity presents itself there are key aspects that can tell an investor whether it is coming from a reliable source or a scam artist.
“If they’re a reputable company you should be able to ask questions and expect really good answers from them,” he began.
“If it sounds too good to be true, it probably is – so ask more questions.
“And when you start to ask questions that they can’t give you the answers, that should tell you you’re in the wrong place.”
Many first-time investors also forget that there is heavy regulations and large regulatory bodies patrolling the financial services industry and noting whether these are present in an investment is another key aspect.
“If you’re looking at investing money, then clearly most investment services will be regulated.”
Mr Komolafe explained that the company should be FCA authorised and regulated.
As well as that, an investor should do some further research to see whether the investment would be covered under the Financial Services Compensation Scheme (FSCS).
“In 2018, we looked at investment scams and there were 3,385 of them and that totalled £50million that people lost.”
The biggest alert should be if an investment involves any requirement to use untraceable currencies, he warned.
“At the end of the day, if you are being asked to deposit Bitcoin, which is untraceable, into an investment opportunity: massive red flag.”
Mr Komolafe concluded: “That isn’t to say to shun away from cryptocurrencies.”
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