Some banks and savings institutions are now offering uninsured products
such as mutual funds and annuities. These products may provide you with
higher returns, but these investments involve risk. America's Community
Bankers, a national trade association representing nearly 2,000 savings
institutions across the country, has provided the answers to some commonly
Q. Are the mutual fund or annuity investments I buy from a bank or savings institution insured?
A. No. These investments are not like insured deposits. They are not guaranteed by the FDIC, they are not guaranteed by the bank or savings institution, and they are not guaranteed by the U.S. government. You are not protected against losses on the amount you invest.
Q. Are there risks in investing in mutual funds or annuities?
A. Yes. You may get more or less back than the original amount you invested. There may also be sales charges for these investments. The sales representative should thoroughly brief you to make sure you understand these risks and charges, and you should be asked to sign an acknowledgement form verifying that you have received the information and understand it.
Q. Who can sell me these products?
A. Only properly trained sales personnel can sell these products. Tellers may not sell or provide advice to you on these products. They can refer you to the sales desk for these services.
Q. How can I be sure I am investing in the right mutual fund or annuity?
A. A sales representative should ask you questions about how much risk you are willing to accept, your investment objectives and your financial resources and background. You have no obligation to provide this information, but it would be helpful to the sales representative in suggesting the most appropriate investment for you.
An informative brochure about mutual funds and annuities is available free by calling America's Community Bankers' toll free information line at 1-888-414-8113 or by writing to: ACB Communications Department, 900 19th St., N.W., Washington, D.C. 20006.
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