The world of investing is evolving rapidly, and so are the tactics that companies use to mislead investors. For those investing in the Netherlands, it’s crucial to easily spot and understand these investment red flags to make the best possible decisions for their capital.
Sophisticated scams, “cloned” firms, and unregulated platforms are becoming harder to distinguish from legitimate opportunities, and in this article, we explore the possible red flags you must look for when choosing where to invest in 2026.
- What do investing red flags mean
- Regulation and licensing don’t align
- Unable to reach the “team”
- No public information about team members
- Lack of transparency in communication
- No risk disclosures
- Limiting access to trades and capital activity
- Unrealistic financial promises
- Pressuring through social influence
- Invest smart
- Frequently Asked Questions
What do investing red flags mean
A red flag in investing is a warning sign that a company or entity may not have the investor’s best interests in mind. While red flags don’t always indicate fraud, they can be risky and warrant further investigation.
Red flags have evolved beyond amateur websites, minor errors, or pyramid schemes. Today, companies can mask their true intentions, presenting convincing facades while sharing selective information about licensing or reputation. One significant but unreliable indicator is their social score, which may not accurately reflect their credibility. Spotting these warning signs early can protect your investments and help you avoid potential losses.
Regulation and licensing don’t align
A crucial check every new investor must make before investing is to verify whether the company is regulated and licensed. The research should go beyond simply identifying the license number and must dig deeper to determine whether the claims are valid.
A major red flag is when companies claim they operate in a strict jurisdiction, such as the Netherlands or the UK, but hold a license from an unrelated offshore island known for loose regulations. Operating with a financial license in the Netherlands is not the same as having one.
Investors should look for cloned firms or minor name changes, which are tactics used to trick investors. It’s always important to double-check all the company’s details before committing to an investment.
Unable to reach the “team”
A significant red flag is when a company’s team members are unreachable or their professional history is concealed. The personal connection between an investment firm and its investors is a crucial trust factor, especially when financial transactions are involved.
Firms that consistently avoid client meetings, refuse calls, or withhold basic information should be viewed with suspicion. A simple Google search of key personnel should yield some basic information about their professional background.
Check whether the company has dedicated investor relations managers and whether it’s possible to schedule calls to discuss its products. Companies that are evasive and fail to accommodate reasonable client requests are a significant warning sign in the investment world.
No public information about team members
While anonymity was a feature of the early crypto world, it’s a significant liability for professional asset management and trading platforms today. You should be able to put a face to the company and individuals handling your money.
Founders, portfolio managers, and other financial professionals typically have an established digital footprint. If the team behind a company has a minimal online presence, it could indicate that their services may not deliver the expected returns.
When a team is entirely anonymous, there is no accountability. If the platform shuts down or your funds disappear, there is no one to hold responsible, which is a major red flag.
Lack of transparency in communication
The way companies generate returns is not always fully disclosed, and that is okay. Companies that’ve built proprietary trading algorithms don’t disclose their investment strategies. However, they do share information with their customers about the trades they make, how trading is done, and the concepts and processes involved.
Companies can protect their intellectual property, but it’s important to distinguish between having IP rights and simply sharing incorrect information. Vague buzzwords like “AI,” “high-level trading,” and “quant processes” without any substance are often a red flag. They are used to mask a lack of actual trading activity.
Companies would specify how they trade, the types of assets they trade, their risk level, and how they handle volatility. At times, they would even provide an overview of their performance to existing clients. It’s important to ask or look for answers in their communication.
No risk disclosures
All investing involves risk. This is a fundamental truth of financial markets, so whether you are buying government bonds, trading cryptocurrencies, or simply trading stocks, trading is never “risk-free”. Anyone who claims otherwise shows major red flags. And in 2026, that is a common practice, especially on social media.
Legitimate platforms, including those targeting high returns, will always provide a disclaimer outlining the potential for loss. It’s important to read the fine print and also their investor deck or similar documentation. The absence of a risk disclosure is, ironically, one of the biggest risks of all.
Limiting access to trades and capital activity
Capital and investment should always be visible, as they provide transparency about how your money is used. Dashboards are a common practice in 2026, and if they are unavailable, relations managers should always be available to help.
A red flag in an investment company is when funds are misplaced or cannot be withdrawn. If companies act this way and limit your access to your capital (even if they visualize it) and don’t always provide concrete responses, it’s a red flag. It’s important to avoid companies that impose arbitrary, undisclosed restrictions on withdrawing your capital or profits.
While short-term locks are standard and contract-based, they should be announced. However, if you face “verification delays” every time you attempt a withdrawal, it is a red flag.
Unrealistic financial promises
Managing expectations is key to long-term investment success. While the crypto market can offer yields significantly higher than traditional banking, there is a limit to what is mathematically sustainable.
Be skeptical of platforms promising:
- Doubling your money in days or weeks.
- Claims of “guaranteed” “sure things” “invest with confidence.”
- Referral bonuses that pay out more than the investment itself.
Compare potential returns against reputable high-yield performers. For example, aiming for 5% monthly returns through active quantitative trading is an ambitious but achievable target in volatile markets. However, promises of risk-free, exponential growth usually indicate a Ponzi scheme in which new investor money is used to pay off earlier investors.
Pressuring through social influence
FOMO is a powerful driver, and companies that use this to bypass critical thinking are a red flag. Why? Because they don’t allow investors to make reasonable decisions and only trigger emotional responses.
It’s important to watch out for pressure tactics such as “Don’t miss the opportunity” or countdowns on their websites. Instead, legitimate companies that show green flags provide guides, aim to teach new investors, and are always available for questions. They present their value proposition and allow you to make an informed decision on your own timeline.
Invest smart
Navigating the investment world in 2026 requires a balance of ambition and caution. By keeping a vigilant eye for these red flags—from regulatory mismatches to unrealistic promises—you empower yourself to make smarter decisions.
Frequently Asked Questions
What are common red flags when investing in online trading platforms?
Common red flags on trading platforms include cold calling, difficulty withdrawing funds, inconsistent addresses, or software “glitches” that work against the user.
How to spot red flags in investment apps available in the Netherlands?
Check whether the developer is known; it’s a red flag if the app can only be downloaded from websites and isn’t available on the app store. To spot red flags, also read reviews across all platforms to understand what the clients complain about. Complaints about withdrawals and customer service are a red flag.
How to check if an investment company is regulated and free of red flags in the Netherlands?
To verify a company in the Netherlands, you should consult the official registers maintained by the financial authorities. The firm should be regulated or notified by the AFM or the DNB. It’s a red flag if they appear in the AFM’s warning list.
