- What is the liquidity of the investment?
How easy is it to get your money back when you want to sell
or cash in your investment?
- Understand the entry, ongoing and exit
fees of an investment. Compare them to similar investments.
Fees can have a large impact on your long-term returns.
- What is the size of the investment? The
size of managed funds, for example, can vary greatly.
- Are you comfortable with the organisations
you're investing in and through?
- If you have any suspicions that the investment
scheme may be an investment scam, check out the latest bad offerings
at the Financial Markets Authority
Ministry of Consumer Affairs' Scam Alerts.
- Before handing your money over to any adviser,
ensure you've been told, and are comfortable with, their money-handling
procedures. If possible, make cheques payable to the investment,
for example, a fund manager, rather than the adviser.
- Understand the tax implications of your
investment instrument. Just as tax benefits and liabilities
differ for each investment opportunity, so will tax status.
And, just like fees, taxation can have a major impact on your
- Read all the available documentation
on the investment. While the investment statement must be given
to you, you may have to request other documentation.
- If you don't completely understand what
the investment is about, or you're uncomfortable with it for
any reason, avoid it completely; there are hundreds of alternative