Interest Rates Low, Investment Risks High [AUDIO]
Following the Federal Reserve's announcement that interest rates are expected to remain low until at least 2014, the New Jersey Bureau of Securities is cautioning investors in the Garden State to beware of risky investments.
"What we're talking about are the kinds of things that intuitively don't make sense. They don't make sense to us for a good reason, they're unlikely to be true," said State Attorney General Jeff Chiesa.
"People will try to entice people who have these steady but but lower rates of return on their investments to take on an investment that is presented to them as something that's got a high rate of return with little or no risk," said Chiesa. "Those two things are completely incompatible. When evaluating any investment, it pays to remember that risk and reward go together."
The Bureau is particularly concerned that Individuals who depend on fixed income investments, particularly seniors, may be tempted to turn away from their slower growing but safe investments to alternative investments without understanding the risks and terms. "That can lead people right into trouble," said Chiesa.
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. The lower the risk, the lower the yield or return.
"Before purchasing any investment, you should ask all the questions you need to ask, find an investment professional you trust to discuss it and don't immediately jump into something that sounds like it's a really good investment opportunity that just doesn't make sense. If it sounds too good to be true, it usually is," said Chiesa.
For more information or if you think you may have been presented with a fraudulent investment opportunity, contact the Bureau of Securities at 973-504-3600 or via email at askBureauOfSecurities@dca.lps.state.nj.us.