Sandwich Generation: Red Flags of Investing

Fraud can happen to anyone. Members of the Sandwich Generation, their elderly family members and their children are no different. Watch for red flags when considering an investment opportunity.

Some common phrases used by salespeople to mislead investors:

Guaranteed high returns – no risk! There’s no such thing. The higher the returns, the higher the risk. This type of sales pitch is often aimed at people who live on a fixed income or are near retirement and are worried about not having enough money.

Insider tips – get in now! Scam artists use this tactic to pressure you into making a quick decision. They make the offer more attractive by suggesting they have secret information about a company that the general public doesn’t have. They pressure you to act now to “get in on the ground floor”. This could be particularly tempting for members of SandGEN who are looking to supplement insufficient retirement assets.

Offshore investment – tax free! You can defer paying taxes, but you can’t avoid paying them. This type of deal is often pitched as a secret. By asking you to keep the deal to yourself, promoters of these investments hope to avoid hard questions from family, friends or financial advisers who might see through the scam. Often, your money will be transferred to overseas locations, making it harder to recover and even harder for the authorities to investigate.

Profit like the experts! The promoter convinces you that he or she has access to inside information known only to a select few who are said to be making a lot of money. For example, in a prime bank scheme, investors are told about the existence of a secret market that only the world’s largest banks know about and certain investors are then given an exclusive opportunity to participate in this secret market. The catch is: secret prime bank markets don’t exist.

Great investment opportunity – your friends can’t be wrong! The success of these opportunities relies on the trust you place in your friends and the fear of not keeping up with them financially. For example, “affinity fraud” occurs when salespeople target religious, ethnic, professional or social groups. They work their way into organizations and befriend members in order to sell them fraudulent investment products.

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