Caution: Low Interest Rates May Lead to Empty Promises

Following the Federal Reserve's announcement that interest rates are expected to remain low until at least late 2014, investors should be aware of risky or outright fraudulent investments promising higher yields or returns.

Turn the Skepticism Dial to High

Now that interest rates are forecasted to be low until at least 2014, you may be lured by an investment that offers a high return with little or no risk. Before signing up, understand the investment, the terms and the risks.

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 to investors; the lower the risk, the lower the yield or return.

For those who depend on fixed income investments, particularly seniors, they may be tempted to turn away from their slower growing but safe investments to alternative investments without understanding the risks and terms.

Examples of possible fraudulent schemes that can be cloaked as credible investments include private placement offerings, promissory notes, securitized life settlement contracts and investments in energy, precious metals and distressed real estate.

Before purchasing any investment, remember to ask the following questions:

• Are claims made for the investment realistic? Use common sense and get a professional, third-party opinion when presented with investment opportunities that seem to offer unusually high returns in comparison to other investment options.
  
  
• Has the seller given you written information that fully explains the investment? Request written information that fully explains the investment, such as a prospectus or offering circular. The documentation should contain enough clear and accurate information to allow you or your investment adviser to evaluate and verify the particulars of the investment.
  
  
• Are the seller and investment licensed and registered in Oregon? We can tell you if they are. If they are not, they may be operating illegally. Click here to get licensing and registration information.