IRAs (individual retirement accounts) are one of the best ways to save for retirement. While they’re often associated with investing in stocks and bonds, they can also be used to invest in real estate or other assets that have historically protected against inflation. However, IRAs aren’t without their risks—and those risks increase when scammers get involved. That’s why, before you open a traditional IRA account, it’s important for you to know what you should watch out for when it comes to protecting your IRA investments against fraudsters.
Practice Due Diligence
Here is how you can do it:
- Understand the risk. The IRA is invested in something that has an inherent risk, just like any other investment you could make. If you don’t understand this, then it may be wise to consider another type of investment that does not have as much risk involved (such as stocks).
- Understand the return on investment (ROI). How much will your IRA grow over time? This depends largely on how well your investments perform and how long they stay invested in certain assets with high returns; however, you can use historical data from past investments to get an idea of what your future might look like if things go well!
- Understand tax implications: You will need to file taxes every year for this type of account since it is considered retirement money – so keep track of when those dates come around each year so as not to miss anything important.
Diversify Your Assets
Your IRA can be a valuable source of financial security. However, it’s important to keep in mind that even the most well-protected investments can come under attack from the scammers of the world. One way you can protect your IRA from such attacks is by diversifying your assets within it and beyond it. Diversification is an investment strategy in which you spread money across different types of assets so that if one fails or doesn’t perform as expected, there are others to offset any losses that result from this failure.
Educate Yourself on Your Investments
Before you invest, take the time to learn about your investment options. You should also read the fine print and ask questions of any firm that is trying to sell you an IRA product. For example, if a sales representative tells you that their product comes with a guaranteed return or fixed rate of return, be wary. This could mean that they are selling investments that are not suitable for IRAs.
Review Your Statements Monthly
According to SoFi’s experts, “Review your statements monthly for accuracy and ensure that each account balance is correct.” Don’t rely on online banking to review your statements. It can be difficult to spot errors when you’re not comparing the numbers with a paper statement or another type of record, such as an account summary from the previous year.
Report Suspicious Activity
If you think that you have been targeted by a scam, contact the SEC immediately. The SEC will then notify all of the other government agencies to whom they report suspicious activity and begin an investigation into your case.
In addition to calling the SEC, it is also important to contact your state securities regulator and/or state attorney general’s office as soon as possible. Your IRA custodian may not be able to do everything necessary on their own to protect your retirement account from fraudulent activity, but these organizations can help put pressure on them in order for them to take action to protect your IRA from being scammed away from you.
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