Low Interest Rates May Lead to Empty Promises
Following the Federal Reserve's announcement that
interest rates are expected to remain low until at least late 2014,
investors should be aware of risky or outright fraudulent investments
promising higher yields or returns.
Turn the Skepticism Dial to High
Now that interest rates are forecasted to be low
until at least 2014, you may be lured by an investment that offers
a high return with little or no risk. Before signing up, understand
the investment, the terms and the risks.
All investments carry a degree of risk. The level
of risk usually is related to the return that investors can expect
to receive. Investments with higher yields or returns carry a higher
risk to investors; the lower the risk, the lower the yield or return.
For those who depend on fixed income investments,
particularly seniors, they may be tempted to turn away from their
slower growing but safe investments to alternative investments without
understanding the risks and terms.
Examples of possible fraudulent schemes that can
be cloaked as credible investments include private placement offerings,
promissory notes, securitized life settlement contracts and investments
in energy, precious metals and distressed real estate.
Before purchasing any investment, remember to ask the following
- Are claims made for the investment realistic?
Use common sense and get a professional, third-party opinion when
presented with investment opportunities that seem to offer unusually
high returns in comparison to other investment options.
- Has the seller given you written information
that fully explains the investment? Request written information
that fully explains the investment, such as a prospectus or offering
circular. The documentation should contain enough clear and accurate
information to allow you or your investment adviser to evaluate
and verify the particulars of the investment.
- Are the seller and investment licensed and
registered in Oregon? We can tell you if they are. If they
are not, they may be operating illegally. Click
here to get licensing and registration information.