The pirate got your savings - you just shook his hand

Traditional pirates ruled the seas, stealing treasure by force, intimidation, and bloodshed. Yet, modern-day pirates still exist but have evolved. They still inflict serious harm but without breaking a sweat! They don’t need to use violence or force. Instead, they manipulate you into handing over your money willingly with a smile and a "thank you."

We are referring specifically here to investment scams, not hacking or phishing scams to get hold of your personal information. Investment scams are solely focused on creating a legitimate-looking investment shell to place your pool of savings.

When you are a competent investor, you might be more at risk for scams than you think. Before someone can teach you how to grow your money, we must first teach you how not to lose it. Where to place your money and knowing who to trust is key, because those who seem the most trustworthy can sometimes be the biggest con artists of them all.

Many people confuse bad investments with scams. But they’re not the same. A bad investment is a legitimate company with poor performance or unfortunate timing.

A bad investment involves a real company or asset with investment risks. Returns may rise and fall with the market cycle, but the business exists.

A scam is a phantom and is a fraud risk. Its design is to take your money with no real intention of delivering value. It usually promises guaranteed returns, uses high-pressure tactics, and lacks transparency. Always ask yourself if this 'opportunity' is too good to be true. If you find yourself asking this question, know that the answer is probably YES! This is the first red flag you should adhere to. From here on out, proceed with caution.

If you've lost money in a legitimate investment, there may still be a way forward to recoup your losses. (This depends on the structure of the investment.) But money lost to a scam? It's not a loss because of bad luck, timing, or skill. It's theft! Not knowing the difference can lead you to make even worse decisions once you have already bought in.

If you are unsure, contact a qualified financial advisor.

Scammers are not only criminals but master manipulators. They often understand human emotions better than we do. They prey on the desire for instant or immediate transformation.

They study human behavior and refine their approach to tap into fear, desperation, and ego. Their main goal is to earn your trust and get you to hand over your investment savings. This strategy exploits our behavioral biases.

A behavioral bias is a natural tendency for our brains to make decisions that aren't logical. These biases can lead individuals to make choices that may not always be sensible. They lead you to interpret information based on your emotions rather than the facts at hand. To learn more about common behavioral biases and how to avoid them in finance, click here.

The most magnificent scam I’ve ever heard of involved a former teacher. She is a smart and respected individual who lost her and her husband’s entire retirement savings.

What made this scam so clever? Unlike most scammers, they stayed in touch and provided reassurance instead of disappearing after the transaction.

Doesn’t this approach make you think: “If this were a scam, why would they still take my calls? Why would they meet me for coffee? Why would they continue to give me updates?" That doubt kept people hooked, which is what made it so dangerous.

Our minds often lead us to believe that scammers disappear after a transaction; they change numbers, avoid contact, or vanish overnight. However, they understood this flaw in her thinking.

So, they did the opposite. They stayed in touch, provided updates, and if she got anxious, they would fly out to meet her. They talked her through the reasoning behind payout delays and kept the illusion alive that it was a legitimate investment. For years. They were thieves hiding in plain sight.

Here’s how they kept people hooked:

-Early payouts created the illusion of real returns. These payouts were not actual profits but funds from new investors. They would make payouts only in the beginning so that it appears real.

- When early payouts started to dry up, they provided legitimate explanations for the delays.

- There was a genuine investment component. A physical asset existed, but it was not generating any returns.

This scam affected thousands of people long before it was reported to the authorities.

What made this scam strategy particularly clever was its ability to delay victims from reporting it. The longer individuals remain silent and avoid questioning its legitimacy, the more time scammers have to target additional victims. Even worse, they often manage to deceive the same individuals multiple times. It made the need to find new victims and rebuild trust from scratch much less.

They provided convincing excuses for needing a bit more money, apologizing for miscalculations and blaming rising prices, all of which sounded reasonable and believable. As a result, current victims continued to pour more money into a pitch-black hole.

It was a carefully crafted illusion that led to many victims being scammed not just once, but two, three, even four times before realizing the truth.

There’s a dangerous assumption that only the gullible and stupid fall for scams. The reality? Anyone can fall victim when emotion overrides logic—especially when we're under pressure.

Research indicates that financial stress can greatly impair our cognitive abilities. When in desperate situations such as trying to escape debt or change our financial circumstances, we become more susceptible to offers that claim to provide relief.

Know your triggers. FOMO, Greed, Desperation, Ego. These can all lead you down the path to missing obvious signs of a scam

Slow down. Urgency is the enemy of logic. Real investments don't have a time limit and need not be rushed.

Verify everything. Research like your life depends on it. Because your financial future does. Legitimate businesses leave a trail: reviews, history, complaints, and clear, transparent information. Use the internet as your first line of defense. Search every detail you have—their name, company, contact info, website, and promises. If they’ve scammed before, chances are there’s already a trail of damage online. But be cautious: if you find nothing, that doesn’t guarantee they’re safe. It simply means there’s no clear evidence—yet. A lack of red flags isn’t the same as a green light. When in doubt, dig deeper. Your vigilance could be the reason you never fall victim.

Ask for help. If you’re unsure, speak to someone outside the situation. Get a trusted professional involved, like a lawyer, a financial adviser or a reputable firm.

Remember the saying: If it sounds too good to be true, it probably is. Ask yourself—why can they offer such high returns when others in the same industry can't?

All it takes is a little doubt to evoke a fear of missing out. Many people ignore warnings from experts because we only truly understand the situation once a scam is exposed. To see how even trusted employees can be misled into investing, watch "Dirty Pop" on Netflix.

If you're uncertain, it's better to miss out on an opportunity than to risk losing everything.

Finally, let's break the cycle by raising scam-resistant children too.

It’s time to give our children the knowledge we never had—the straight-up truth that there are people who will try to take what we’ve worked hard for. Technology will make it easier for new and smarter scams to pop out of the shadows. Let’s make sure they don’t have to learn the hard way, like so many before them.

When we raise money-wise children, we create scam-resistant adults, who become manipulation resistant and bias conscious. And when no one buys into their carefully crafted illusions, they lose their power, along with their highly profitable business models.

Put simply: Become impossible to scam, and raise your children to be the same.