For Mark Roberts’ Use: Those of us who consider ourselves to be rational people, well educated on financial issues, tend to believe that we could never fall for a fraudulent money scam. Maybe it’s because we think these things aren’t all that common, and they mostly just happen on TV. Or perhaps it’s because we feel confident that we would recognize a con artist when approached by one.
Unfortunately, fraudulent financial schemes are much more common than you would believe. A study by the FINRA Investor Education Foundation found that 84 percent of Americans aged 40 and older have been solicited by con artists. Sadly, 11 percent of those surveyed have actually lost money to a scam. So not only are the con jobs more common than you think; a lot of people don’t recognize the signs of a scam until it’s too late.
How does this happen? FINRA found that the following sales pitches often seem convincing:
- “This investment has made hundreds of people extremely wealthy” – 30 percent of survey respondents found this statement to be believable
- “The lowest return you could possibly get on this investment is 50 percent annually, but most investors are making upwards of 110 percent per year” – 42 percent of people responded favorably to this statement
- “There is no way to lose on this investment; it’s fully guaranteed” – 43 percent found this believable!
These statements set forth unrealistic expectations, something that should immediately set off your alarm bells. But people tend to fall for these scams as they approach retirement, because time is limited and they’re feeling nervous about their future income. It’s probably easier to believe in a money scam when the con artist is telling you something you really want to hear.
Any time you are approached about an investment scheme, remember these rules:
- If it sounds too good to be true, then it probably isn’t true.
- Never give out your bank account information or send money without proof of someone’s legitimacy.
- Remember that con artists can make things look very “official”, even when they’re not.
- Be skeptical of everything and everyone.
Don’t be tempted by promises that sound unrealistic. If you’re worried about your retirement plan or the size of your nest egg, give us a call. We can help you devise a strategy to achieve your goals, without taking risks that make you uncomfortable.