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(originally published October 2009)
For the first time in a year, the Dow Jones Industrial Average recently broke 10,000, which some may interpret as a green light to invest. But this doesn’t mean that you should pull out your checkbook for the first investment offer that comes along. In fact, smart investors will continue to be alert for red flags before parting with their hard-earned dollars.
Here in Indiana, my office’s Securities Division works to fight investment and mortgage fraud by investigating claims of fraud and seeking justice for the victims whenever possible. I believe the best form of investor protection, however, is investor education. That’s why my office partnered with dozens of other organizations around the state to conduct more than 200 live workshops and events this month during the 4th annual Money Smart Week Indiana. The events focused on financial literacy, or having a basic understanding of personal finance concepts, with topics including steps to homeownership, retirement planning, identity theft, investment fraud, budgeting, credit card smarts and more.
The more Hoosiers understand personal finance concepts and learn from other situations where investors have become victims, the less likely they are to fall victim to fraud. Listed below are the 10 red flags you should be aware of regarding investment and mortgage fraud:
Having a solid understanding of financial concepts can lead to smarter savers, more responsible consumers and better informed investors. Most people don’t realize that Americans lose an estimated $40 billion every year to investment fraud. There is a strong connection between financial literacy and falling victim to investment and mortgage fraud. Now more than ever, it’s important for investors to be “money smart.” They should understand concepts like risk tolerance, the difference between a stock and a bond, how to perform background checks on financial services professionals, and more.
Protect your hard-earned savings by keeping an eye out for these red flags. Also, take action today to become better educated and to maintain better money management habits. Visit http://www.indianainvestmentwatch.com/ for more information.