A note to investors: Questions to ask before investing

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Investing is a risky business. It is important that investors conduct a thorough evaluation of the background of the business they are interested in before handing over their hard-earned money.

The Securities and Exchange Commission offers some tips on what investors should do before jumping in with both feet. Below are questions any investor must ask to avoid future financial troubles:

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 Questions about the product

1. Is this investment product registered with the Securities and Exchange Commission (SEC) and with my state securities agency?
2. How will this investment make money? Through dividends, interests, or capital gains?
3. What is the total sum to purchase, maintain, and sell this investment?
4. How liquid is this investment? How easy will it be to sell if I needed my money?
5. What are the specific risks associated with this investment?
6. Where can I get information about this investment?

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Questions about the progress of investment

1. How frequently do I get statements?
2. Is the return of investments meeting my expectations and goals? Is this investment performing as I was led to believe?
3. How much money will I get if I sell my investment today? 

But what if the questions were answered satisfactorily yet a problem still arises? In any endeavor, especially in finance, the occurrence of unforeseen problems is inevitable. When faced with financial challenges, there are several steps an investor can take: talking to financial professionals and their supervisors, writing to the compliance department of the firm’s headquarters, and asking for help from the SEC.

This Alex von Furstenberg blog offers more tips on how to invest wisely.