Sales brochures usually give you just the basic information about an investment. Before you buy, you will likely need to learn more, including:
- How does the investment work? This includes any rules about buying and selling the product, and how it fits with your goals.
- What does it cost? Every investment costs something, but the fees don’t all work the same. Sometimes the costs are part of the total amount you pay to buy an investment. Sometimes you’ll pay separate fees when you buy or sell an investment. There may be other fees as well. Some sales brochures don’t tell you all the costs you may pay.
- How much can I expect to get? Interest rates change often, so if you are buying an investment that pays interest, you may not get the latest information from a sales brochure. It’s even harder to know what you’ll make investing if you are buying an investment on the stock market. For example, a mutual fund brochure can show how much investors earned in the past, but this is no guarantee of what you will earn from that investment in the future.
- Is my money safe? There are two things to think about here: 1. What happens if my investment company fails or goes out of business? In some cases, your investments may be insured. That means you will not lose money if your bank or investment company goes out of business. 2. What are the risks if I buy this investment? There are no programs that will protect you from losses on the stock market. When you are deciding which investment to choose, understand that there are some risks with every investment. A sales brochure can’t assess how much risk you are willing to take. For that, you may need an adviser.
- How much do I have to invest? Sometimes you have to put a minimum number of dollars into an investment. Sometimes you pay so many dollars at the start, and then can make a smaller investment if you want to buy more.
- What other choices do I have? Just like Ford isn’t going to tell you about a great new car from General Motors, a sales brochure isn’t going to tell you about the products that competitors sell. A smart consumer will want to shop around.
Remember: Before you buy any investment, make sure you get all the facts
It’s also a good idea to look at several choices before you decide.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.