Saturday | September 17 | 2011
2011 HOW TO GUIDE
PAGE 17
How To AVOID COMMON INVESTMENT TRAPS When it comes to investing, many people approach their initial foray with a degree of trepidation. Much of that is due to the nature of investing, which involves a leap of faith even for the most conservative investments. The economic downturn that began near the end of the first decade of the 21st century has only added to the fears associated with investing. While investing is a risk, it's also a necessary step for men and women hoping to secure their financial futures. Whether an investment portfolio consists of just a 401(k) or an IRA, men and women who hope to retire need to find a way to balance their fear of investing with their desire to retire comfortably. Many of those fears can be count e red by watching out for some of these common investment traps. ☛ Environmental investments. The "go green" movement has opened the door for scores of investment traps that prey on an investor's desire to invest in ways that will improve their bottom line
and the environment at the same time. Such traps are especially prevalent in the aftermath of environmental disasters like oil spills. Investors should be wary of e-mail or telemarketing campaigns that promise investors they have the products needed to fix disasters, whether it's an oil spill or a hurricane. Whenever investing in green technologies, i nve s t o rs should do extensive research before agreeing to invest. ☛ "Hot tips." Nearly every investor has been offered a "hot tip" at one point or another. N ovice and even ve t e ran investors should be especially wary of such tips, which are often unfounded and could cost investors substantial amounts of money in the long run. ☛ Special deals. Some private deals are legitimate, though investors, particularly beginners, must be especially wary of "special" investment deals that often prey on unsuspecting investors. Typically framed as a chance to get in on the ground floor and invest in a busi-
ness that's trying to raise capital, these "special" deals are often f raudulent and inve s t o rs could lose a lot of money. ☛ Bewa re of online sales pitches. Social media has made it easier than ever before for con artists to victimize unsuspecting investors. This investment trap often boasts high-yield returns and might even suggest these returns are taxfree. Any investment that guarantees either of these things is too good to be true, and beginning investors should avoid them. ☛ Gold scams. Though some investors embraced gold as an investment opportunity during the economic downturn, beginners should be wary of investment pitches that offer to buy gold for investors and then sell it once the value of gold has risen. The North American Securities A d m i n i s t ra t o rs Association warns that in many of these
instances the gold does not exist. Investors who want to invest in gold should instead consider a gold fund. To learn more about investing, visit the NASAA at www.nasaa.org.