In rough economic times such as these, many investors have seen their accounts suffer large losses. As New York securities lawyers, we’ve seen some investors’ accounts lose 25-50% over the course of a few months or years, while others have seen their accounts lose such large amounts seemingly overnight. A large drop in account value is unsettling for every investor, but for those nearing retirement or senior citizens living off their savings, large losses are extremely alarming and can be devestating. Regardless of their age or situation, investors who have suffered large losses often find themselves asking the same questions, “Is my account down because of the market, or is it something else?”
Investors who are approaching retirement or who are already retired are typically risk-averse – i.e. willing to accept lower returns to avoid the possibility of devastating losses. However, many of these investors find themselves being sold on “sure thing,” “big winner,” “can’t lose,” and “have your cake and eat it too” investment strategies that seem, and in fact are, too good to be true. Those who buy into these false promises can find themselves unknowingly invested in products and strategies that are much riskier than what they wanted, and most importantly, what they should have been invested in. Unfortunately, good times in the market can hide these risks from the average investor. It is not until a downswing in the market that these risks come to light, often taking the form of large, unexpected and crippling losses.
Many people who want to invest seek out professional guidance in handling their savings and their investments because they feel safer in the hands of professionals whom they trust and whom they believe are looking out for their best interests. Unfortunately, this trust can be abused and investors often find themselves in accounts that are not suitable for their financial needs and the amount of risk they are willing to take with their investments.