Tips for better investments
You’ve been saving up your money for a number of years. Take the time to think about your investment priorities. Here are 4 tips to consider before investing.
1. Know your investment goals and investor profile
- What do you want from your investments?
- How much tolerance to risk do you have? Would you be very upset if your investments lost value? It’s important to realize that, generally, the higher your expected returns, the riskier your investments will have to be.
- How comfortable are you investing on your own? Before doing so, ask yourself:
- Do you have a good grasp of financial information?
- Do you have the time to manage your investments and keep track of the markets?
- Should you start off with small investments?
2. Choose a representative
Choose a representative and firm based on your needs and level of investment knowledge.
Know that not all representatives and firms offer the same services:
- Some provide advice and complementary services such as research on securities and portfolio management.
- Others act as intermediaries by buying and selling securities according to your instructions, without offering you advice.
Ask the representative about his qualifications and experience.
Check that the person and firm are authorized to offer you the investment. Contact the AMF Information Center or consult the Register of firms and individuals authorized to practise.
Have you named a trusted contact person (TCP)?
Your investment dealer, portfolio manager or one of their registered representatives (for ease of reading, “your advisor”) might witness situations one day that could threaten your financial interests. These situations could raise questions in your advisor’s mind such as “Are you being mistreated financially?” or “Are you showing signs of a diminished mental capacity to make informed financial decisions?”
Measures in place to help your advisor better protect you when these situations arise.
When you open an account or update your investor profile, your advisor will ask you to name a trusted contact person (TCP) who can be contacted by your advisor in specific circumstances, including if your advisor:
- Is concerned about possible financial exploitation of you
- Is concerned about your mental capacity to make informed financial decisions
- Can’t get in touch with you
Your advisor will ask you for the name and contact information of the TCP and your written consent to contact the person. However, if your advisor has concerns about you or your account, he or she should discuss them with you before contacting others, including the TCP.
Are you investing on your own?
If you’re investing on your own on a discount brokerage platform, the broker that operates the platform will also ask you to name a TCP.
There are limits on what a TCP can do
Your TCP can’t:
- transact on your account
- make decisions about your account
While you’re not required to name a TCP, a TCP can be a resource to assist your advisor in better protecting your interests.
3. Know how your representative is paid
Check and compare the fees and services of several firms and representatives before choosing a representative.
Once you have made your choice, give your representative clear, specific instructions about any transactions you want to make.
4. Know what you’re investing in
Read the prospectusA prospectus is a detailed information document that a company must prepare to be able to sell securities (such as shares) to the public.
It must provide full, true and plain disclosure of all material facts likely to affect the value or market price of the security in question. of any company you’re thinking of investing in. For mutual fundsA mutual fund is made up of money that is pooled by several investors and used on their behalf by a manager to buy shares, bonds or other securities in line with the fund’s objectives. , read the Fund Facts.
Always take the time to do your investment homework, using reliable sources of information.
Ask questions and learn about the companies in which you’re investing.
Beware of fraud
When something is too good to be true, it probably is!
- Be skeptical of anyone who promises huge profits. High returns usually means high risk.
- Don’t believe everything you find on the Internet—it’s easy to exaggerate or lie on-line. Always confirm sources.
- Don’t invest if you are made to feel guilty because you’re hesitating about making certain investments.
- Be suspicious if the person refuses to disclose the name of his firm or tries to change the subject after giving you only minimal information.
- Be extra cautious if you're asked to keep an investment secret.
- Remember, it’s illegal to make transactions on the basis of information that is not publicly disclosed.
For more information, see the section Fraud prevention.End of the warning