Don’t Get Burned By These “Hot” Investments
FINRA Issues Warning About Chasing Yields
All of you know how adamant we are at The Financial Coaching Center about helping you understand the relationship between risk and reward. Most of you who have been to our classes know how markets actually work, and realize there is no free lunch. Yet you also know people who are hurting because of low interest rates, and who might be tempted by promises of high yields.
As usual, there are plenty of “advisors” anxious to capitalize on the fears of those who need fixed income. Regulators recently issued a warning about three products because of significant “recent high inflows.” Those three products are structured products, junk bonds, and floating-rate bank-loan funds.
“Investors should always look behind an investment’s yield, ensure that they understand how the investment works and carefully consider its fees and risks before investing,” Gerri Walsh, vice president for investor education, said in a statement.
Structured products “can have significant drawbacks such as credit risk, market risk, lack of liquidity and high hidden costs,” the alert said.
Ahh, yes. Lots of risk and high hidden costs, business as usual. Here’s the link if you want all the details:FINRA to investors: Watch out!
By the way, when did you last attend one of our classes? There is no substitute for education. Trusting an “advisor” to do the right thing, when that person is selling products for a living, is not a great strategy.
Our next class is Thursday. If you’re planning to attend, just let us know. It will be a fun, informative session.
If not, why not?
