Don’t Get Caught in These Investment Traps
The Office of the Attorney General has a website coordinated by the New Jersey Bureau of Securities that aims to financially educate consumers about safe investing, investor-related legal actions and investor scams.
One recent report from the North American Securities Administrative Association (NASAA) lists the top ten investment traps. People who have suffered losses in their traditional investment and retirement accounts may be trying hard to recoup their losses and may fall prey to investment scammers.
The old saying, "If it sounds too good to be true it usually is" applies here, even when slick salespeople have documentation stating their high-yielding investments are "guaranteed" or "risk-free."
According to NASAA these are the top ten traps to avoid:
1. Investing in new products or inventions may occasionally reap high rewards but it is highly risky and best left to the venture capitalists who are professionals. Even if you are promised big returns, do not risk your retirement or savings.
2. Short-term, so-called "insured" commercial promissory notes that are nine-months or less in maturity may be very tempting but the companies that are selling these notes are usually foreign, don't have the legal authority to do business in the U.S. and don't have the financial resources to guarantee the notes. Many seniors have been duped into buying these notes and have lost their life savings.
3. Mortgage relief scam offers have increased with home owner delinquencies and foreclosure threats. Many of these offers promise to "save" the home or modify the mortgage terms in exchange for an upfront fee, but once the fees are collected the scam artists disappear.
4. State regulators have seen an increase in the amount of private placement offerings, which allow small businesses to raise capital by selling securities to a small group of investors without going through a regulated federal securities process. Most of these offerings are very risky and many are fraudulent.
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