The Exciting World of Investing
When you are ready to step into the exciting world of investing, you have two choices on how to make the system work for you; you may either work with a broker or you can trade on your own. The most important thing to remember is that you should always monitor your investments. By tracking your investments you will be able to avoid the minor, as well as major, pitfalls that investors can come across. The following are simple protective steps as you begin your investing journey:
• Keep all documents in an organized manner that you receive from your broker, mutual fund or investment adviser. Read all paperwork and make sure your confirmations and account statements are accurate.
• Track all communications that you have with your broker or adviser. By taking notes as you talk to your broker or adviser you can avoid unseen problems from arising down the road.
• Make certain that all account statements and communications are sent directly to you. If it is not possible for you to keep abreast of your own investments, have copies of all documentation sent to someone you trust. Have someone in the family, a lawyer or accountant review your documents, so that there is always someone else looking after your affairs. If, for some reason, you don't get account statements or confirmations, make sure to do a follow up. It is your right to this information, and if you are not receiving these documents on a regular basis, it may mean there is a hidden problem.
• Make sure to ask questions regarding investment information you receive. Don’t feel shy about inquiring about things that are not clear. If you happen to see unauthorized investments on your confirmations or account statements, contact your broker or adviser right away. Don't wait to see how the investment performs.
• Consider getting online access to your account. Even if you don’t plan on trading online, online access will enable you to review your account whenever you feel a need to. Verifying information from your broker or adviser or the ability to request confirmations and account statements can be done with just a few clicks.
• Never write a check to your broker, adviser or another individual for an investment. In most instances, your checks should only be sent to your brokerage firm, its clearing firm, or another financial institution.
• When you meet with your broker it is a good idea to also visit the firm, if possible. You are making a major financial undertaking and you have the right to investigate and be cautious as you are with other major purchase you make.
• Research your investments independently. It is a good idea to verify information by thoroughly reading prospectuses, research reports, offering materials, annual reports (Form 10-K), quarterly reports (Form 10-Q), and other filings that a company makes with the SEC. SEC filings, such as Forms 10-K and 10-Q, can be accessed on the SEC Web site.
• Review your portfolio periodically. Check to ensure the securities in your account meet your investment objectives, and make sure you understand and are comfortable with the risks, costs, and liquidity of your investments. As you do a review, check information that is on file at your brokerage firm regarding all agreements such as new account, margin account option account and discretionary account agreements, as well as any correspondence to you. The firm's records must accurately reflect important information about you such as your age, income, net worth, financial status, long-term goals, and investment objectives.
What if You Have a Problem?
If problems arise, and you see a mistake in your account, immediately question any transaction or entry that you do not understand or did not authorize. Remember it is your money you are concerned with, so don't be timid or too shy to complain. The securities industry needs your help so it can operate successfully. Following are some simple steps you should take:
• With any major concern, talk to your broker, as this is probably the fastest way to resolve problems.
• If the problem can’t be resolved with your broker or perhaps you believe your broker is engaged in unauthorized transactions or other serious misconduct, report the matter to the firm's management or compliance department in writing.