Advice for seniors from regulators and Sen. Herb Kohl of Wisconsin, senior Democrat on the Senate Special Committee on Aging:
- Investigate before you invest.
- Take your time before you make any decisions; no one should rush you into investing your money.
- Make sure you fully understand any investment you make. Ask for copies of all documents you are shown, especially any that you sign.
- Be wary of unexpected phone calls, letters or personal visits from strangers who ask you for money.
- Check out the person you may be investing your money with. Ask for the person’s credentials. Make sure that he or she has a license to sell securities.
- Keep your personal information private until you have completely checked out a financial adviser and a potential investment.
- Be vigilant about your investments. It’s OK to ask questions. Remember: it’s your money.
- It’s OK to complain to the appropriate regulatory agency if you think there is a problem with your investment.
Common investment scams include improperly conducted seminars for seniors, with con artists posing as financial planners; scam artists posing as licensed securities brokers or insurance agents; “callable” certificates of deposit that don’t mature for 10 or 20 years unless the bank calls or redeems them, with early redemption often resulting in large losses; phony promissory notes promising high returns, issued on behalf of financial institutions or companies that don’t exist; Ponzi schemes paying high returns to initial investors out of money coming from later investors; investment fraud using the Internet, and deceptive or inappropriate sales of annuities. Annuities, which are often described as mutual funds wrapped in an insurance policy, are tax-deferred and often used to save for retirement. The periodic payout they provide changes depending on the performance of underlying investments.