Retirement Life
15 October 2025
Investing Safely
Every investor dreads the possibility of investment losses. All investments carry risk and therein lies the challenge. It’s not always easy to identify or quantify what the risks might be. The best solution is to be well educated on investment principles and well informed of any potential threats through fraud or scams.
Most countries around the world have a securities regulator which oversees the operation of financial markets. In New Zealand, that regulator is the Financial Markets Authority (FMA). One of the FMA’s key roles is to provide information and resources to consumers so they can make better investment and financial decisions.
The FMA belongs to IOSCO – the International Organisation of Securities Commissions, which takes a global overview of investor protection and acts as an information exchange network to reduce the impact of failures at an international level.
World Investor Week
During October, IOSCO ran their annual World Investor Week, aimed at updating investors on the latest investment trends, with an emphasis on investor protection. The key themes of the week were:
• Technology and digital finance
• Artificial intelligence
• Fraud and scam protection
• Supporting themes of crypto assets and basics of investing.
The rise of technology and artificial intelligence means that New Zealanders are increasingly vulnerable to scams and fraud of international origin.
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Tips from the experts
There are several important messages from World Investor Week. It’s becoming increasingly difficult to distinguish between legitimate and illegitimate sources of information online. Digital trading platforms are on the rise and investors need to be aware of the risks associated with these platforms. Artificial intelligence is being used for data analysis and modelling but the results generated may be misleading. While such models may useful, nothing beats doing your own research to confirm the results.
With regard to fraud and scams, IOSCO has the following tips:
• Research investment opportunities before investing and use only reliable sources of information
• Avoid ‘get rich quick’ and ‘can’t lose’ schemes
• Know that any promise of ‘guaranteed’ high returns with little or no risk is a red flag
• Distrust anyone who pressures you into making hurried investment decisions
• Never disclose personal data during unexpected calls
• Use strong passwords for accounts containing financial data
• Be sceptical of unsolicited investment offers received through social media.
• Verify the source of any investment information found online.
Beware the ‘pump and dump’ scam
The FMA has recently issued a warning for Kiwis to be aware of what they call ‘pump and dump’ schemes operating here. These are part of a global network of scams aimed at market manipulation.
The scam works like this: An impersonated business leader on social media encourages people to join a fake investor chat group. Investors are encouraged to buy shares in a company – a company in which the scammer has also purchased shares. The scammer then actively encourages more investors to purchase these shares over a period of several weeks. This buying activity effectively 'pumps' up the price of the shares.
The scammer then sells (‘dumps’) their shares at a much higher price than they paid for them, while the other shareholders suffer financial losses as the share price falls. As part of the ‘pump’ process, the scammers may issue false information about the target company’s future prospects to make it look like a good investment.
They impersonate well respected Kiwi business leaders to lure people in to their chat groups on platforms such as WhatsApp. To make things worse, after the investors suffer losses, the scammers often claim, falsely, that the investors may be entitled to compensation or reimbursement. They then collect further personal data and payments from the investors.
Look before you leap
To avoid getting caught by such schemes, be attuned to signs of a scam and understand what you are putting your money into. For retirees, investing is not about making huge returns with a high level of risk, it’s about keeping your money invested safely with a reasonable rate of return until such time as you need to spend it. The old adage of ‘look before you leap’ is a great one to bear in mind.
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Written by:
Liz Koh
Liz Koh is a money expert who specialises in retirement planning. The advice given here is general and does not constitute specific advice to any person.
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