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5 things to consider before you commit to an investment

Don't just save your money, invest. (istock)
  • People invest so they can make returns.
  • But some people end up losing their investment because they fail to consider certain things.
  • Here are five questions you should consider and answer satisfactorily before you invest.

Investing your money is a good thing. But an investor must always ensure they invest right.

People often invest their hard-earned money and expect returns after a certain period. But some do not receive their expected returns possibly because they do not invest right. Some lose their principal as well as interest because they asked no questions before investing

Here are 5 questions to consider before you invest.

  • Is the seller licensed?
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The appropriate regulatory authority must licence the investment company. If they have not been licenced you should not do business with them. Remember to check if their licence has been revoked at a point and ask questions.

  • Is the investment registered?

Before you start a business you must be registered. Find out if the investment company is registered. What is the description of the business of their registration certificate? Keep in mind that some register and do a very different business from what they registered.

  • How do the risks compare with the potential rewards?

You are investing to receive some returns in the future. You should consider if the risk involved is worth the returns you will receive.

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  • Do I understand the investment?

You should get an expert to explain investment into details for you before you take a decision. You should particularly understand the type of investment you are getting into.

  • Where can I turn for help?

In case the investment company collapses where do you report to? How do you at least get your principal investment back? 

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