ANSWERS: 1
  • Finding out about investing is a two-step process. The first requires establishing what will be right for the individual: what type of investor she is, how much risk she is willing to incur, and how long-term or short-term the potential investment will be. The second step is finding the right place to invest.

    The Investor Education Fund

    There are myriad places to get personal financial advice. The Investor Education Fund is a non-profit independent financial information site established by the Ontario Securities Commission. Its website helps establishing some basic framework for personal investment decisions.

    U.S. Securities and Exchange Commission

    Once the investor has established his personal goals, he can begin to research individual companies, mutual funds and brokers. The U.S. Securities and Exchange Commission has a wealth of information on most U.S. companies trading in the market. The SEC's website is a great place to start researching a potential investment. Federal securities laws mandate that most companies file reports with the SEC. These reports are extensive and include essential financial information. These can be accessed by any investor in the SEC's EDGAR DATABASE (See Resources section).

    State Securities Regulators

    For information about the owners of the company with which you are interested in investing, contact the state securities regulator. Information about individual state's securities regulators can be found through the North American Securities Administrators Association.The state securities regulator also might have additional information on a particular company if it is not listed in the SEC's EDGAR database.

    Brokers and Investment Advisers

    Contact a broker. If a company is not audited or certified by an accountant, it is advisable to find the "Rule 15c2-11" file for the firm. This file provides information on the company's financials, and it is mandated by the SEC in order to allow a non-reporting company to be quoted on the NASD. Information on brokers and investment advisers can be found through the Broker Check Program and the Investment Adviser Public Disclosure Program, respectively. Links to both of these programs are on the SEC's website.

    Red Flags

    When looking at a company's financials, consider some of the "red flags" provided by the SEC. Red flags include SEC trading suspensions, difficulty in finding information on a company, a company with large assets but small revenues, and unusual auditing issues.

    Questions

    The SEC has a list of possible questions that investors should consider. These are broken down into types--for example, pertinent questions for mutual fund investing, or questions to ask financial advisers.

    Source:

    SEC

    The Investor Education Fund

    More Information:

    EDGAR Database

    North American Securities Administrators Assocition

    Checking out a Brokerage Firm or Financial Advisor

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