Protect Your Money: 5 Investor Safety Tips

As any good investment fraud lawyer will tell you, no one is too smart or too careful to become a victim of investment fraud. After all, a certain amount of good faith is needed for the financial sector to be able to exist, which is why the legal system offers pathways for investors to recover their losses when that good faith is exploited.

However, this doesn’t mean that there aren’t steps you can take to make yourself safer when investing. Especially if you handle most of your investments online. Here are some safety tips that can help guide your investment decisions.

1 - Be realistic

When a deal seems too good to be true, it probably is. Most bad actors in the financial market exploit not only people’s trust but also their greed. Always be wary of deals that are both too good to be true, especially if they are sent to you without you asking for them.

2 - Check the paperwork

In the US, most investment options need to be registered with the DFI or some other institution. Stock traders and brokers also need licenses and permits to operate, as do online brokerages. This all means that a legitimate financial agent offering an investment opportunity should be able to produce documentation that shows the legitimacy of the deal with minimal hassle.

The trick here is being able to interpret the situation correctly. For example, a scammer may be able to provide the registration numbers of a company and an investment option, and you may find that those registration numbers match the DFI’s database. But this alone does not prove that the person who contacted you can sell the investment in question, or even that they are part of the institution they claim to represent.

3 - Choose your broker carefully

There is a lot that can go wrong when making investments online, so it’s important to be extra careful when deciding which broker to use. Don’t just trust the website or judge it based on hearsay — go digging through customer reviews to see what the most common complaints are.

You may find that a given online broker has a fast and responsive website, but their customer support is slow to answer and ineffective. Which likely means that if something goes wrong with one of your trades, getting help from that customer support team will be more frustrating than necessary.

4 - Read the fine print

It’s important to check the fine details of how a broker or investment opportunity will operate. Terms of service and investment contracts can hide fees and other limitations that can cut into your earnings, or make it harder for you to cash out.

5 - Avoid public networks

Public computers can easily hide all types of information gathering software, so it’s wise not to do any type of financial transaction on those. The same goes for trading on public networks, such as the ones you find at airports and coffee shops. The widespread use of strong encryption has made these public networks less dangerous, but they are still not as safe as browsing from a secure connection.