Five Questions to Ask Before You Invest

Finance

Finance Tips & Info

Whether you’re a first-time investor or have been investing for many years, there are some basic questions you should always ask before you commit your hard-earned money to an investment.

Question 1: Is the seller licensed?

Research shows that con-artists are experts at the art of persuasion, often using a variety of influence tactics tailored to the vulnerabilities of their victims. Smart investors check the background of anyone promoting an investment opportunity, even before learning about opportunity itself.

Researching brokers: Details on a broker’s background and qualifications are available for free on FINRA’s BrokerCheck website.

Researching investment advisers: The Investment Adviser Public Disclosure website provides information about investment adviser firms registered with the SEC and most state-registered investment adviser firms.

Researching SEC actions: The SEC Action Lookup - Individuals allows you to look up information about certain individuals who have been named as defendants in SEC federal court actions or respondents in SEC administrative proceedings.

If you are not sure who to contact or have any questions regarding checking the background of an investment professional, call the SEC’s toll-free investor assistance line at (800) 732-0330.

Question 2: Is the investment registered?

Any offer or sale of securities must be registered with the SEC or exempt from registration. Registration is important because it provides investors with access to key information about the company's management, products, services, and finances.

Smart investors always check whether an investment is registered with the SEC by using the SEC’s EDGAR database or contacting the SEC’s toll-free investor assistance line at (800) 732-0330.

Question 3: How do the risks compare with the potential rewards?

The potential for greater returns comes with greater risk. Understanding this crucial trade-off between risk and reward can help you separate legitimate opportunities from unlawful schemes.

Investments with greater risk may offer higher potential returns, but they may expose you to greater investment losses. Keep in mind every investment carries some degree of risk and no legitimate investment offers the best of both worlds.

Many investment frauds are pitched as high return opportunities with little or no risk. Ignore these so-called opportunities or, better yet, report them to the SEC.

Question 4: Do you understand the investment?

Many successful investors follow this rule of thumb: Never invest in something you don’t understand. Be sure to always read an investment’s prospectus or disclosure statement carefully. If you can’t understand the investment and how it will help you make money, ask a trusted financial professional for help. If you are still confused, you should think twice about investing.

Question 5: Where can you turn for help?

Whether checking out an investment professional, researching an investment, or learning about new products or scams, unbiased information can be a great advantage when it comes to investing wisely. Make a habit of using the information and tools on securities regulators’ websites. If you have a question or concern about an investment, please contact the SEC, FINRA, or your state securities regulator for help.

Information Source: SEC - The Office of Investor Education and Advocacy

Getting a Financial Picture

If you want run successful business you should have real financial picture of a business. Accurate, up-to date records are very important for every aspects of your business. It's certainly not fun, but without accurate records, you simply cannot run a successful business. It is much easier to deal with various tax departments of government or with your banker if your records are complete and comprehensible. Learn more...

Understand

how your portfolio is performing

Know

what your costs are

Diversify

have effective diversification

Did You Know?

It is important to diversify your investment portfolio to make sure your portfolio is working for you. You should have a number of investment solutions that can ensure you stay true to your investment profile and are progressing toward your goals.

Effective divertification starts with exposure to the three main asset casses: savings and cash equivalents (e.g. bank accounts, money market funds and shorter-term GICs) and equities (stocks). Your financial advisor can help you allocate your investment dollars between these asset classes according to your investor profile, which should be determined by your time horizon, comfort with volatility and investment objectives. Business and Finance Pages...

RomWell Travel Guide

It is quite true that the more you travel, the more interested in travel you are. No matter how many times you visited interesting places, there is always something new to be discovered. Learn more about your destination before your trip and make it even more enjoyable and practical.

Find out more

Finance