How to protect your investment money
Many investors worry that they don't know what to do to protect their investment money. The first thing to understand is that most investment scams, are perpetuated by an investment advisors. However, there are guidelines that can protect you from being taken. However, you it is crucial to understand that there is nothing that can protect you 100%, but if you follow these suggested guidelines it will reduce the chances that you will be cheated on an investment. There is inherent risk in every aspect of investing, from where you choose to put your money, to the person who helps you to deal with it. You must be able to be comfortable with some degree of risk. If you are someone who simply cannot tolerate the thought of risk and will spend their nights worrying, then investing might not be for you. Here are some common sense guidelines that can help you to get started. Here is what you need to know about how to protect your investment money-
- Have a plan-One of the most important things you need to do is have an investment plan. You should not even begin to search, for an investment advisor, until you have a clear understanding of your financial needs and goals. You want to be sure that you find the investment advisor who can best help you meet these goals.
- Do your homework-Just like you would research every investment opportunity; you need to apply the same diligence to researching potential investment advisors. You should never agree to become a client of anyone, until you have completed a thorough and exhaustive research of their background.
- Always have a contact-You should never agree to work with any financial professional with a contract. This should be a written and signed contract. The contents of the contact should clearly spell out what services will be offered, how much they cost and how the investment advisor, will be paid. In addition, there should be an automatic termination policy that can be used by either party. There should also not be a termination fee, other then a small administrative fee. If your investment advisor wants to charge a large termination fee, then this is a red flag that indicates you should move on to someone else.
- Know who is doing the work-You should never allow your contract with your investment advisor to be transferred to someone else, without written consent. After you have taken all of the time and effort to establish a relationship with your investment advisor, you should be confident that this is the person that you will be working with. If the transfer of service happens without written consent, you should be able to terminate your contract immediately.
Now that you know the guidelines that can help to protect your money, here is what you should do to find the right investment advisor-
- Get referrals for certified investment advisors from friends and family. However, you should keep in mind that not every investment advisor will match your goals and needs, so you should keep this in mind when getting recommendations. In addition, some of the largest investment scams have happened through recommendations from family and friends, so you should still do your homework and research every name you are given.
- Interview at least 3-4 prospective investment advisors-This is important decision, so don't limit yourself to just a couple of people. Meeting with at least this many investment advisors, will help you to have a clearer overall picture of the type of investment advisor, who can best help you meet your financial goals.
- Check all professional certifications-Once you have narrowed down your list, you need to make sure that you have checked all certifications, licenses and registrations. An easy what to do this is to check online with your state regulatory office. You should also check and make sure that they have never been the recipient of any disciplinary action.