Investment Related Questions To Ask Before You Invest

If you are thinking about investing your money to meet your financial goals, you should have a list of questions to ask any prospective financial advisor, counselor or guru. Not only will you become at least partially financially literate but your investing could just end up producing personal financial freedom for you.

An excellent opening question is to ask if the investment is registered with the Securities and Exchange Commission (SEC) or your state securities agency. Registration doesn't insure peak performance but it does provide a safety net in that it had to pass muster before it could be offered to people in your jurisdiction.

You will want to know if the investment matches your investment goals and if it is suitable for you. You can only get those answers by asking questions.

Investments are made so the investor can make money. As a potential investment you will want to know how the product makes money. Does it pay dividends, interest or by capital gains. More specifically, what must happen for this investment to increase in value.

Fees and expenses and commissions are involved in every investment product on the market. You will want to know the fees not only to invest but maintain and, if need be, sell this particular product. Once you know those, how much does this investemnt have to increse in value before you break even is important to know.

Notice I didn't say make a profit. I said break even. This is important because at the very least you want a return OF your investment. A return ON your investment is icing on the cake.

Coupled with cost is liquidity. You should know if you have to hold it for a period of time or if you can sell it if it no longer meets your financial objectives. If you have to hold it, the length of the holding period is an important consideration.

Throw in risk and you have an almost complete information package. I say almost because you may have other criteria. Rsik, in simple terms, of an investment means how much an investor can lose in that particular product. This doesn't mean the product will lose money, it means there is a chance it could lose some or all of your invested principal.

Like I said, this is a very complete questionairre to have at your fingertips when considering an investment. Remember, if you have other questions or criteria bring them up at the time you are speaking to the agent or product representative.