The ten questions to ask before investing your hard-earned cash
In this article they explain to people who want to invest what they should ask their selves before investing. The Times tells us that there are 10 basic questions.
1. What am I investing in? It’s important that advisers can answer all of your questions and that you remember that investments sometimes have very misleading names.
2. Is my capital secure? Not every investment is delivering profits and you can lose money on everything. Even if you invest in “guaranteed products” you may be disappointed to see that those products aren’t as guaranteed as you thought they were.
3. How risky is the investment?
4. What are the charges? It’s important to know exactly what the fees, commissions and charges of the investment are, because these can add a lot of extra costs.
5. What if the provider goes bust? If your provider goes bust, you can be compensated by ‘The Financial Services Compensation Scheme’, but be careful: the FSCS only protects you against the busting of the product provider and not against the falling apart of the underlying bank.
6. What are the tax implications?
7. When can I access my money? A good notification of this aspect is crucial, because a lot of investment bonds charge penalties on early withdrawals or steep if investors want to cash in their money earlier than thought.
8. Who is advising me? It’s better to take advice from someone with a diploma in financial planning instead of taking the advice from bank advisors, because the latter (working on commission) may be pushing you in buying shares.
9. Are all my eggs in one basket? In other words, it’s important to spread the risk of investing, instead of putting all your money in one product.
10. Do I feel pressurized? It’s a well-known fact that handling under pressure isn’t good at all, which certainly applies to the investment branch. So if you feel pressurized by an advisor or if you feel any doubt, don’t buy it!
Nowadays, there exist a lot of manuals of the genre ‘singing for dummies’, ‘cooking for dummies’ and off course ‘investing for dummies’. I think it’s important to bear in mind that investing is more than gaining money without doing anything and that it may be risky to invest in something. A lot of people don’t realize this, so it’s a good thing such guidelines exist.
Off course, these rules aren’t formulas for a successful investment, but they certainly point out some significant traps.
Having read this article, I would think twice before investing, and I would certainly use this little ‘checklist’ before putting my money in some shares.
http://www.timesonline.co.uk/tol/money/investment/article6814015.ece
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Dear Nicolas
BeantwoordenVerwijderenIt’s important that you think before you invest. After reading these ten questions you know that it is important to invest in different branches, to check companies,… in other words, to be careful what you invest in. It’s dangerous to invest but when you do it carefully and with these questions in the back of your head, you can and will have better investments than when you invest without checking.