Determine Your Investment Goals
Before you invest, determine what your investment goals are. Are you saving for retirement, a business, or college? Or just looking to boost your wealth? The investments you choose should be determined by your goals.
Determine Your Investment Risk
Risk and return go hand-in-hand. Higher risk usually means greater risk. Lower returns usually means greater safety. When choosing an investment determine if its risk matches your risk tolerance. With the exception of bank insured products, there will always be a degree of risk involved in investing.
Here are some of the common risks of investing:
- Compatibility Risk: The investment may not suit your needs or goals.
- Inflation Risk: The investment may not keep pace with inflation, eroding its value.
- Market Risk: The risk of changes in the market reducing the value of your investment or returns.
Develop An Investment Plan
To reach your investment goals you will need a plan. Decide whether you are going to develop a plan yourself or consider working with an investment professional or a financial planner.
- Choosing and Working with Investment Professionals
Information about choosing and working with investment professionals.
Remember To Diversify
It's a good idea to diversify your investments. Spreading your money among different kinds of investments can lessen risk. The idea is to avoid a situation where big declines in the value of just one or two investments wrecks your portfolio.
Ask The Right Questions Before You Invest
Before investing, ask tough questions, both of yourself and those who are soliciting your investments.
- List of Questions to Ask Before You Invest
See our list of questions you should ask before you invest.
Know Your Rights
As an investor you have the right to ask for information about the investment as well as the person selling the investment.
- Your Rights As An Investor
Information about your rights as an investor.
Work with Licensed Professionals and Registered Products
Investment professionals need to be licensed with the Washington Department of Financial Institutions (DFI). In addition, most investment products sold need to be registered with DFI.
To check the licensing status and to find out if there are any complaints against an investment professional or investment product, contact the Washington State Department of Financial Institutions at 1.877.RING DFI (746-4334). If you live outside of Washington state, contact your state securities regulator.