So, your friend has approached you with an investment idea and you’re trying to decide whether or not to pour some of your hard-earned money into the suggestion. It’s not always easy to know which investments sound reasonable and which are dangerous. Here, we offer a quick overview of some of the key points to consider when looking into an investment opportunity. Certainly, these suggestions won’t guarantee a great investment – they will, however, set you on the right path towards investing wisely.
There are a number of red flags that should alert you to stay away from various investments. If you have to pay money to look into the investment or if the investment doesn’t really make sense, stay away from it. If the money goes into a club or a company where they keep your books, or where the books are offshore, stay away. It’s easy for the company to run away with your money in this type of situation.
Healthy investments, in contrast, allow you to look at their documents and results for free. Your investment is kept in your own account at a bank, brokerage or other investment location.
While you can’t always function on gut reactions, you should definitely listen to yourself. If someone that you are acquainted with talks about an investment that is too good to be true and encourages you to join – it probably is too good to be true. While some investments will certainly be profitable – nothing is going to be magic. Look for sound investments and investment advice from those you know well and trust.
