Many older people are at risk because they trust investors
without thoroughly checking them out.
We are fortunate to have the Securities and Exchange
Commission (SEC) looking out for all of us.
They have posted a warning about deceptive sales practices
being used by some brokers (not banks).
The certificates of deposit (CDs) they are selling are
One-Year high-yield (CDs) that cannot be redeemed after the
year without high penalties. Thatís because the CDs are
"one year non-malleable" which means they are actually
20-30 year CDs with significant penalties for early redemption.
This is where the deception comes into play because the
terminology used misleads the buyer to believe that they can
redeem the CDs in one year.
Many seniors are looking for the security of a CD for their
savings. Some brokers
are trying to sell these CDs to older people for their retirement.
These CDs maybe a safe investment however, these are not
recommended for an 80-year-old investor. The 80-year-old would
have to be 100 to 110 years older before they could
redeem the CD without penalty.
Make sure you use a legitimate brokerage firm,
insurance company or bank,
to purchase CDs or other investments like stock, bonds,
mutual funds or annuities. Make sure that you fully understand
what you are purchasing, if the seller or selling agency does not
thoroughly explain the product a red flag should go up.
The SEC has a brochure for consumers to help warn you of
Bryant Quinn, a respected financial columnist from the Washington
Post, has also issued warnings to her readers. Read
her article in the Washington Post.