Watch out for a stock scam: There are scam artists who target (beginning) investors and try to steal their money. Although most investors can recognize stock scammers, everyone can fall off the bandwagon and trust their money to these thieves. Below you can find the most common signs of stock scammers:
Guaranteed return: Only if you buy a bank Certificate of Deposit (CD) or Treasury bond you can assure yourself that you will be getting a guaranteed return. There is always a risk involved with investing in the stock market and delivering a guaranteed return is too good to be true for any person/business.
Notification by infomercial or e-mail: If you find out about an investment opportunity though an infomercial it is likely a scam. The company behind the infomercial has to pay loads of advertising costs to be able to appear on TV (which they will deduct from your investment money) and will likely target foolish people who are after a quick and easy way to make money. Investment deals through e-mail are no different than the infomercials, both are trying to rip you off.
Amazing returns: If the person/business makes an offer too good to be true, it probably is. On average the stock market returns around 10% of your investment annually with some better and some worse years. Most investors will rarely beat the market by 5% so be skeptical of amazing returns such as 25%. However, returns of higher than 25% are NOT impossible. Some of the most successful investors have made much more than this and sometimes offer products which may help you achieve a great profit yourself.