The rocky markets are bringing con artists out of the woodwork — and they are promoting investment scams that promise huge returns but deliver only misery. Watch out for…
Gold in the vault. You are told that an investment broker will buy gold for you for a small fee and store it in a bank vault. The scam: The supposed broker never buys the gold and disappears with your money. What to do: Invest in precious metals only through a broker at a well-known investment company, or buy mining company stocks or shares of a mutual fund focused on precious metals.
High-yield bank paper. You are told that you have a rare opportunity to invest in safe, high-yield financial instruments, such as debt or letters of credit, that are from established European banks and that usually are available only to governments or other banks. The scam: These bank securities, often touted as “prime bank” instruments, do not exist. The con artist will disappear with your money. What to do: Be wary of anyone who promises huge returns at low risk…or who suggests that you invest in anything that you have never heard of.
Old bonds. You are told that you have a chance to buy — for a very low price — a bond that was issued by a well-known company decades ago when interest rates were much higher. The scam: The matured bond has been cashed in and no longer has any investment value. Scammers buy old bond certificates traded as collectibles and sell them to investors looking for high yields. What to do: Be wary of any corporate bonds that are offered by anyone other than a well-known brokerage firm. Call investor relations at the company that issued the bond. And be aware that a bond with a rate higher than current market rates would normally have a premium price that erases all or much of the advantage.
