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How can you protect your money in investments?

Some investors have grown frustrated by the years of low returns available from banks and building societies. Credit: PA

In an ITV News/The Guardian investigation into Gavin Woodhouse's business dealings, we showed how some investors haven’t received their returns as promised.

Mr Woodhouse is promising investors will be repaid, but other schemes haven’t ended happily.

Other high-profile cases where investors fear they might have lost their money include the collapse of bond scheme London Capital & Finance and failure of property development projects like “New Chinatown” in Liverpool and “Angelgate” in Manchester.

This comes as some investors have grown frustrated by the years of low returns available from banks and building societies and are looking for alternative investments.

Pensioners also have more choice over what to do with their retirement savings due to pension freedoms.

There are plenty of investment opportunities out there, but it’s important to do your research before putting your money into a scheme.

Here are some tips on what investors can do to protect themselves and their money.

Do your homework

Invest in your research time and find the answers.

The most important time to look into the company, entrepreneur or scheme you are considering investing in is before you put money in.

Ask questions, and access publicly available documents.

You can view a company’s most recent financial results by looking at their accounts on the Companies House website.

Get impartial advice

It’s recommended that you seek impartial financial advice before investing.

And if you need legal advice, don’t just take it from a lawyer or professional recommended by the company selling the investment.

Check the regulation

Pore over the paperwork and the small print.

Almost all financial services firms are regulated by the Financial Conduct Authority (FCA), and it also publishes a register of regulated financial advisers.

Regulation matters, because if a firm goes bust, investors can apply to get their money back from the Financial Services Compensation Scheme, up to a limit of £85,000 per person, per authorised firm.

Investors can also apply to the scheme if they receive bad advice from an adviser. But it doesn’t cover some losses, such as from an investment fund which performs poorly.

Not all kinds of investments are regulated.

Unregulated investments are only supposed to be offered to sophisticated or certified high net-worth investors. If that doesn’t apply to you, then unregulated investments should be treated with caution.

Be wary of “guaranteed” returns

Know your risk levels. Credit: PA

All investments carry some degree of risk, and that is risk is reflected in the amount of interest offered.

Higher risk investment will offer higher returns.

If your money is safe, the returns offered will be lower.

Be alert to scams

Scams are becoming more sophisticated, and fraudsters are taking advantage of technology to reach potential victims.

Reject unrequested investment offers

Leave a cold caller hanging.

If someone contacts you out of the blue to offer you an investment, it could well be high-risk or even a scam.

Cold-calling is a technique often used by scammers. If you receive a cold-call, the best thing to do is to hang up.

If you are ever unsure about investing your money in a project, don’t.

And finally, remember if an investment opportunity seems too good to be true, it probably is.