If you are a new investor hoping to make it on your own without an advisor, then make sure that you armed with as much information as possible. There are many people hoping to defraud savers out of their nest eggs. Being able to spot the suspicious savings plan is becoming even more difficult in our global information age.
- Research the Company Thoroughly
If you have the facts that a company is fraudulent or in financial trouble you would never invest. Ideally, this information would be easy to find, but that is not the case. Investors are commonly given company information in the form of annual reports and investor newsletters to begin their search, but often stop with a quick peruse. The reality of the situation is that while largely accepted as unbiased many companies provide document that are designed to paint them in the most favorable light. Factual documents that report unbiased financial facts such as annual reports should not be used to make investment decisions for a company, but rather to get your basic information about the company. Start delving deeply into the history and track record of a computer by using the provided documents to perform an independent search of company investors. Look for individuals that have used the company and can attest to their reputation.
- Ignore Promises and Focus on Reality
If something sounds too good to be true, then chances are that the investment is suspect. It’s easy to look at promised investment returns and graphs that show only gains. Looking at the return instead of the reputation and previous performance data of the investment can lead you to make a choice that has not been fully vetted. You should be asking how the company is regulated and if they are in compliance with all required organizations. While the return is important, if you’d like your initial investment returned with gains, you need to make sure that you do the due diligence and properly vet the investment and ignore the potential until later.
- Too Much Too Fast
Many investors end up on the losing end of the deal because they over-invest in one plan. They invest in a firm, and it performs well for a period, so they invest larger sums of their savings. Investments follow the adage; don’t put all your eggs in one basket. Even the most reliable investment can fall suspect to a bad turn. Diversifying your assets is a key strategy to prevent being routed when and if a downturn happens. No one can predict the market. Just because a stock performs well doesn’t eliminate the risks of investing. And the market is volatile regardless of how a firm performs. Start by investing 5% into the fund and if its gains continue, consult a professional before doing more on your own.
- Beware of Shell Games
In this age of digital transactions, be aware of the location of your money. You should ask where the physical entity of the company is located. Make sure your investment is remaining within your country of citizenship as well. Don’t allow your money to leave your account before you know where it’s headed and who will have access to your funds.