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Maintaining a diversified investment portfolio is a sound financial decision that can help you reach your long-term goals. However, investors have to be increasingly wary of scams that target their money.

Losses due to fraud in the U.S. topped $10 billion for the first time in 2023, and the largest chunk of that pie — more than $4.6 billion — was due to investment scams. That figure marked a 21% increase from the prior year¹.

Investment scams come in many forms², which is part of the reason why they’ve become so disruptive. Fraudsters know that people choose to invest their money in a variety of ways and for a variety of reasons, so their scams are constantly evolving to find new targets.

Let’s take a closer look at what to watch out for and how to keep yourself safe.

Be aware of scams both new and old

You have likely heard of Ponzi or pyramid schemes, which have been around for many years. Both schemes fall under the umbrella of investment scams. In general, these scams convince people to invest in a business or fund, with the promise of huge returns. However, scammers mislead investors about profitability while urging them to keep making big investments, which falsely props up the “value” of their operations.

While Ponzi and pyramid schemes are not new ideas, there are emerging scams with much shorter track records but equally damaging outcomes. For instance, cryptocurrency-related fraud increased 45% last year³. Similar to Ponzi and pyramid schemes, crypto scams trick people into believing that they’re about to take advantage of an exciting, new investment opportunity. Scammers often will impersonate a business or a well-known person, such as a celebrity, to trick individuals into thinking they are following investment advice from that business or person. In reality, victims end up putting funds into illegitimate websites and then can’t get their money back when they realize they’ve been duped.

Because crypto accounts are not insured by the Federal Deposit Insurance Corporation (FDIC), it’s especially important to be cautious when making these types of digital investments.

Keep your money safe

As a general rule, it’s a good idea to avoid downloading and using unfamiliar apps or websites, and that’s true when making investments. You should also avoid sending money to someone you meet online or making any investments based on their advice.

Be thorough when reviewing investment opportunities and raise a red flag if anything sounds too good to be true. If you feel pressured to “act fast” or are told something is a “sure bet,” that should sound an alarm, as investment decisions should be carefully researched and you should always know that there is inherent risk with investing.

Working with financial partners, including an experienced financial advisor, can also help you avoid traps. These partners can recommend more tried-and-true options for your money while developing a long-term plan that manages risk and focuses on steady growth.