In business as in life, there are always risks and investments are no exception.
I used to not know as much about investments and securities in America. Heck, I didn’t even know what the term “securities” meant.
I started to learn about investments and securities in 2020 with my first two full-time clients: a financial advisor and an investment fraud lawyer.
When I first started working with them, I had a lot of catching up to do.
I had to learn about the different types of securities, the laws that govern investments, and the common pitfalls that investors can fall into.
My investment fraud lawyer-client was especially helpful in educating me about all that goes into protecting investors from fraudulent activities.
Here are a few things I learned:
What Does a Good Financial Advisor Do?
A good financial advisor will take the time to carefully review your investment goals, financial history and risk tolerance before recommending any strategies.
Many individuals have very little knowledge in how money flows in America, as such, advisors are an invaluable resource in helping investors better understand their options.
They will discuss the different types of investments and securities available, as well as the advantages and disadvantages each may have. From there, you can decide on the best strategy for your individual needs.
In addition, a good financial advisor will be there to help you understand how to manage your cash flow.
Having trouble managing money? A financial advisor can help you create a budget, set financial goals and track your progress.
What Did I Learn From My Financial Advisor-Client?
I worked with this client for 3 years and one of the main things they taught me was to always do my due diligence before investing.
This means researching the company, product or service that you’re considering and making sure it meets all your criteria for a good investment.
There’s a difference between following a “hunch” and investing with purpose and intent. While we cannot predict the future, we can do our best to mitigate potential losses.
Another thing I learned was to be sure to know what your potential risk is when investing.
Understand the types of investments you are considering and make sure that you understand the terms, conditions and risks associated with them.
Do not make investing gambling! A good investor takes the time to understand their risks, and plays with excess funds they can afford to lose.
What Can an Investment Fraud Lawyer Do for Investors?
An investment fraud lawyer is a specialized form of legal representation who works to protect investors from fraudulent activity.
The more accurate way to describe an “investment fraud lawyer” is a securities lawyer who specializes in helping investors who have suffered investment losses due to fraudulent activity by either a broker-dealer, financial advisor, or other investment professionals.
A good investment fraud lawyer will have experience handling cases through a process called FINRA arbitration.
Unlike other legal proceedings, this arbitration process is quicker and more efficient for investors to recoup their losses.
All broker-dealers and financial advisors are required to register with FINRA and abide by their rules.
When they do not, then the investment fraud lawyer can help investors take action.
What Did I Learn From My Investment Fraud Lawyer-Client?
My investment fraud lawyer-client was a great mentor and taught me the importance of staying up to date on financial regulations and securities laws.
They also taught me how to evaluate potential investments, interpret prospectuses, and look out for common red flags that could signal fraudulent activity.
If an investment seems too good to be true, it probably is.
Investing involves risk and there’s no guarantee of success, so always be sure to do your due diligence before investing in anything.
Whenever someone starts talking about guaranteed money on an investment, walk the other way. No one can predict the future, and you don’t want to invest with an individual that is thinking about all the potential outcomes.
I also learned that investment fraud does happen, and on a wider scale than many people realize.
Investment fraud lawyers are there to help protect investors and make sure their rights are respected.
Why Does So Much Fraud Occur in the Financial Services Industry?
Where there is money, fraud is likely to follow.
The financial services industry has been a target for scammers, hackers, and other criminals looking to make a quick buck.
Securities in America are highly regulated and monitored, but that does not stop bad actors from taking advantage of unsuspecting investors.
In addition, the sheer size and complexity of the financial services industry make it difficult for regulators to keep up with new techniques used by criminals.
Securities are complex, and as such, it is easy to hide fraudulent activity in the complexity.
Investors need to be vigilant and stay informed on financial regulations and news in order to protect themselves from fraudsters.
The Advice I got From Both My Investment Fraud Lawyer and Financial Advisor
The best advice I received from my investment fraud lawyer and financial advisor was to always be sure to understand what you’re investing in and the risks associated with it.
Knowledge is power, and the more information you have, the better off you’ll be.
You should never feel pressure to invest in something that you don’t understand.
Take your time with your hard-earned money, and when you have some level of understanding of how investing works, then you can start to take some risks.
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