There are many ways a person can try to protect themselves from investment fraud, however people tend to overcompensate or undercompensate their own protection when it comes to investing in the stock market. The common reactions are that they tend to either not invest for fear of becoming a fraud victim or they allow all their investments to fall in one category making their investment risk skyrocket.
The ways that you can protect yourself while still investing in the stock market are:
Be wary of social network marketing and internet forummarketing – fraudsters are more than capable of producing ad material for social media site as well as developing their own websites. Just because you come across that looks official, but seems too good to be true, it more than likely is.
Ask questions – Even when you are searching for your own personal investment advisor it is always in your best interest to not only interview your potential advisor but to ask as many questions as needed in order to understand. If your investment advisor goes out of his or her way to make things seem complicated and make you feel like you will never understand what they are trying to tell you, then find another investment advisor because they do not have your best interests at heart.
Be wary for unsolicited advice or investmentoffers – If you saying to yourself, “how in the world did these people get my information?” Do not give them any more information. The investment offer may be legitimate, however it is in your best interest to take a step back and ask as many questions about the investment as possible before giving any of your information.
Research, research, research – Researching any information that you receive as investment advice will protect you over time. Even if your investment advisor is suggesting the investment, research what you can about the company or investment product to determine what is right for you. The U.S. Securities and Exchange Commission (SEC) offers a database called EDGAR, which is all the federally required financial records that the common investor can access in one place.
Know your broker or salesperson – You and your investment broker are a team trying to reach your personal financial goals. If your salesperson or broker is giving you advice that is not in your personal interest then you may become a victim of fraud. You may feel as if this has already occurred, if this is the case, then address your situation by contacting an investment fraud attorney such as the professionals at Thomas Law Group at www.thomaslawgroup.net. The average investor can find disciplinary actions that come against an individual for free at SEC’s or FINRA’s websites.
Know the red flags – Knowing the most common methods of fraud and knowing what to look for when talking about investments with someone will allow you to protect yourself from attack. This first line of defense will also provide you with key words say and actions to take when faced with potential fraud.