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Gregory Tendrich, PA Gregory Tendrich, PA
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Investor Bulletin: 10 Investment Tips for 2016

Whether you are a first-time investor or have been investing for years, here are ten tips from the SEC’s Office of Investor Education and Advocacy to help you make more informed investing decisions and avoid common scams in 2016.

Always check the background of an investment professional − it is easy and free. Details on an investment professional’s background and qualifications are available on the SEC’s Investment Adviser Public Disclosure website, which you can also find through the SEC’s website for individual investors, Investor.gov.  If you have any questions about checking the background of an investment professional, you can call the SEC’s toll-free investor assistance line at (800) 732-0330 for help.

Promises of high returns with little or no risk are classic warning signs of fraud.  Every investment carries some degree of risk and the potential for greater returns comes with greater risk.  Ignore so-called “can’t miss” and “guaranteed risk-free” investment opportunities.  Better yet, report them to the SEC.

Be careful when using social media as an investment tool.  Social media and the Internet have become important tools for investors, but also present opportunities for fraudsters to lure investors into a wide range of investment scams.  For additional information on ways to avoid fraud through social media, please read our bulletin on Social Media and Investing.

It can be costly to ignore fees associated with buying, owning, and selling an investment product.  Expenses vary from product to product, and even small differences in costs can mean large differences in earnings over time.  An investment with high costs must perform better than a low-cost investment to generate the same returns.  In addition, some products, such as annuities, are designed to be long-term investments.  If you need your money early, you may need to pay substantial surrender fees.

Be alert to affinity fraud.  Affinity frauds target members of identifiable groups, such as the elderly, religious or ethnic communities, or the military.  Even if you know the person making the investment offer, be sure to check out the investment and the person’s background – no matter how trustworthy the person seems or how well you think you know them.

Any offer or sale of securities must be either registered with the SEC or exempt from registration.  Otherwise, it is illegal.  Registration is important because it provides investors access to key information about the company’s management, products, services, and finances. Always check whether an offering is registered with the SEC by using the SEC’s EDGAR database or contacting the SEC’s toll-free investor assistance line at (800) 732-0330.

Diversification can help reduce the overall risk of an investment portfolio.  By picking the right mix of investments, you may be able to limit your losses and reduce the fluctuations of your investment returns without sacrificing too much in potential gains.  Some investors find that it is easier to achieve diversification through ownership of mutual funds or exchange-traded funds rather than through ownership of individual stocks or bonds.

Active trading and some other very common investing behaviors actually undermine investment performance. According to researchers, other common investing mistakes include focusing on past performance, favoring investments from your own country, region, state or company, and holding on to losing investments too long and selling winning investments too soon.

Unbiased resources are available to help individuals make informed investing decisions. Whether checking the background of an investment professional, researching an investment, or learning about new products or scams, unbiased information can be a significant advantage for investing wisely.  A great starting point is Investor.gov.

If you have questions about your investments, your investment account or a financial professional, don’t hesitate to contact the SEC’s Office of Investor Education and Advocacy online or on our toll-free investor assistance line, (800) 732-0330.

The Office of Investor Education and Advocacy has provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.

If you have questions concerning the meaning or application of a particular law or rule, cited in the SEC’s 10 Investment Tips above, or if you have questions regarding your investments, financial advisor or stock broker, or if you believe you are the victim of fraud, unsuitable investment advice or misrepresentation, call Florida Securities Attorney Gregory Tendrich.

By submitting this form I acknowledge that form submissions via this website do not create an attorney-client relationship, and any information I send is not protected by attorney-client privilege.

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