Educational Consumer Tips


Author: Better Business Bureau

The following comments provide general information for consumers, and do not necessarily reflect the practices or record of any particular company.

Realistically determine your investment needs and objectives. No investment is risk-free and generally, the greater the hoped-for return, the riskier the investment. Are you interested in long-term growth, a steady income stream, tax savings, quick profit or some combination? If you feel able to take more investment risks for larger gains down the road, "growth" through appreciation of capital might be your choice but if on a fixed income, your main goal might be regular income.

Many schools and community colleges offer low cost courses on the basics of personal investing and the library has publications which may be helpful.

The investor should ask himself if he can afford to lose the money he plans to invest? Is there adequate life insurance? Are there sufficient cash reserves in a very safe place, such as a federally insured savings account, which can be reached rapidly in case of personal emergency?

Once you have decided on your investment objectives, select someone to help you reach your financial goals. Depending on how much money you have to invest, consult with an accountant, bank trust departments, investment advisors or someone familiar with your financial status. As a general rule, you will pay a fee for such services, and possibly commissions.

Regardless how successful the investor or his status in the community, consider each investment alternative. A wise investor is an informed investor, especially since there are numerous and more complex financial instruments offered today. Apply some effort to clearly understand what each investment is, how it is structured, what its inherent risk and benefits are and whether it fits into your investment strategy.