No one can guarantee that you’ll make money from your investments. Smart investors do their homework to reduce their risk; a “buy and hold” approach tends to come out ahead.
- Before you invest, do your homework. Check out the investment, the company, and the person telling you to invest in the offer, even if you know them.
- Find out as much as you can about the investment from independent sources. Is it a stock? Companies that issue stock have to give investors important information in a “prospectus.” Read it before you invest.
- Check out the qualifications of an investment professional. There are a couple of sources to try, depending on the kind of advisor. Check out investment advisor firms or individuals and brokers who sell stocks, bonds, and other securities.
- Find out about the fees related to the investment and the advisor. Even small differences in fees can have a big impact on earnings over time.
- Know the classic signs of fraud.
- Has someone promised a high rate of return on an investment with low risk? High returns always involve high risk. There are never guarantees with investments.
- Has someone pressured you to invest before you’ve had time to investigate?
- Claims that you can “get rich quick” or “make money fast” are also signs of fraud.
- Scammers sometimes work through groups you trust – like military or religious groups, or ethnic communities – or try to gain your trust by operating from a location near your installation. They use that affinity with you to gain – and misuse – your trust.