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Are You Susceptible to Investment Fraud?

Here are common traits of victims — and a quiz that might predict vulnerability.

Investment fraud schemes cost Americans tens of billions of dollars annually. But you probably think that you would never fall for any of them.

The AARP Fraud Watch Network recently released a study revealing traits common to victims, noting three key differences between investment fraud victims and the general investor population:

Psychological mindset. Victims prefer unregulated investments, such as gold and real estate schemes, rather than stocks, bonds and mutual funds. They measure success in life by the amount of wealth they accumulate — and their willingness to take risks leaves them susceptible to aggressive sales pitches.

Behavioral characteristics. Victims make five or more investment decisions per year and tend to respond to ads they see online, in emails and on TV commercials.

Demographics. Victims tend to be older than the overall population, male, married and military veterans. They also typically describe themselves as ideologically conservative. AARP published the seven-question quiz shown on the right to help you learn if you have the traits that predispose you to becoming a fraud victim.

Investment Fraud Vulnerability Quiz

1. How many times per year do you make an investment decision, such as selling one stock and buying another or investing in something new?

a. None

b. 1 – 2

c. 3 – 4

d. 5 or more

Score 3 for d, 2 for c, 1 for b and 0 for a.

2. In a typical month, how many solicitations do you receive from salespeople urging you to invest money in something — via phone calls, email and letters?

a. None

b. 1 – 7

c. 8 – 15

d. More than 15

Score 3 for d, 2 for c, 1 for b and 0 for a.

3. Have you ever made an investment in response to any of the following? (yes or no)

a. An ad you saw on television

b. A solicitation via email

c. A call from someone you didn’t know

d. A presentation you attended as part of a free lunch or dinner seminar

Score 2 for each “yes.”

4. Do you strongly agree, somewhat agree, somewhat disagree or strongly disagree with the following statements?

a. Some of the most important achievements in life include acquiring money.

b. The most profitable financial returns often are found in investments that are not regulated by the government.

c. I don’t mind taking some risks with my money, as long as I think there’s a chance it might pay off.

d. I like to keep my eyes and ears open for emerging investment opportunities that others haven’t yet heard about.

For each, score 2 for strongly agree, 1 for somewhat agree, and 0 for somewhat disagree or strongly disagree.

5. Which of the following best describes your worldview?

a. Liberal

b. Moderate

c. Conservative

Score 2 for c and 0 for a or b.

6. What is your gender?

a. Male

b. Female

Score 2 for a and 0 for b.

7. What is your age group?

a. Under 18

b. 19 – 39

c. 40 – 54

d. 55+

Score 2 for d, 1 for c and 0 for a or b.

RISK SCALE:

High risk: 14 – 28

Moderate risk: 8 – 13

Low risk: 0 – 7

Did you score a high number on the quiz? If so, you should apply greater caution when receiving unsolicited investment pitches.

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