Seniors beware: securities investments are not covered by Federal Deposit Insurance Corporation (FDIC) insurance. While traditional savings and checking accounts are insured by the FDIC, many other types of investments are not insured.
Oftentimes, seniors or others put their life savings in a bank believing the money is safe. However, customer service reps for the bank are paid to suggest different types of investment vehicles for these funds, such as risky investment securities rather than the safe traditional savings and checking accounts clients are used to. The attractiveness of the risky investments is that the client stands to gain more on his initial investment than he would from a standard bank account.
These riskier investments are not protected by FDIC insurance. Therefore, if the investments go sour, the seniors lose savings that would have been safe in a traditional bank account.
Make sure your loved ones and seniors are educated as to the pros and cons of the different investment vehicles BEFORE they visit a bank. When a customer service representative suggests merely going ‘down the hall’ to speak to an investment representative rather than into another building or part of town, investors may be more easily swayed into hearing a pitch from an investment representative.
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