Investing can become overwhelming if you're not a certified financial planner or accounting guru. The average person is bombarded with investment tips and opportunities. According to the Securities and Exchange Commission (SEC), you should take time to investigate investments and find a knowledgeable and trustworthy adviser before investing. A number of other standard tips can help you save intelligently for your future.
Ask Questions
Take time to make sure you thoroughly understand the kind of investment you're considering. Find out what the goals of the investment are, if the investment is licensed and legitimate, and how you can keep up with its progress.
Get It in Writing
Get all promises and projections in writing. Read the small print on investment contracts as well as the entire prospectus to make sure the company or financial institution is solid and has been for a period of time.
Avoid Frauds
Be wary of get-rich-quick schemes and too good to be true promises. Watch for other telltale signs of fraud, such as not being able to get a prospectus in writing, being told you're getting in on a confidential opportunity or promises of no risk in the investment.
Meet the Salesperson
The SEC warns investors to be wary of online investments because of the vast opportunities for fraud. Websites, message boards and online newsletters are primed for scams and misleading information.
Choose Wisely
Choose your investment adviser wisely. Ask for referrals and call them. Look at the adviser's credentials and training. Get all the information about fees and commissions upfront. Consider the adviser's investment philosophy to make sure it gels with your own.
Watch Big Guys
According to Market Watch, when the big investors start buying up securities, real estate and bonds, you may want to follow. Institutional investors, such as credit unions and association funds, have top-notch advisers and often get in the ground floor of sensitive high-yield investments, such as high-end retail, international markets and other commodities.
Exit Plan
Consider how quickly you can get your money out of the investment should you need it or decide you want to move it. According to the Federal Information Consumer Center, you should have a good idea of how quickly you can cash out and what restrictions apply when you do.
Take Risks
The payoff from investments typically is tied to the amount of risk you're taking. The higher the risk, the greater chance there is for bigger payoffs. For example, U.S. Treasury bonds are low-risk investments that pay low dividends, while stock in a startup is high risk, but carries the opportunity to earn a bigger return.
Diversify
Diversify your portfolio to take advantage of high-risk opportunities while maintaining stable accounts in low-risk assured investments. Putting money in a variety of industries allows you to take advantage of slumps and gains as they occur without hitting your total investments.
Look for Tax Advantages
Several investment vehicles carry tax deductions that can help with your overall financial picture. Some of your investment money should include these tax deferrable investments. College funds, municipal and U.S. bonds are a few examples of tax-deferred investments.
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