January 22, 2001

Ten tips to help safeguard your money

MONTREAL – In the coming weeks, many Canadians will be bombarded with advertising promoting mutual funds, RRSPs and other investment opportunities. The steady diet of financial promotions can leave many people scratching their heads. Whom should you trust? What should you invest in? How do you keep track of your assets? Where do you get information?

The Canadian Securities Administrators, an umbrella organization of Canada's 13 provincial and territorial securities regulators, offer the following 10 tips to help safeguard your investments.

  1. Shop around for your securities dealer or adviser. Ask friends for referrals.
  2. Check with the provincial or territorial securities authorities to see if your dealer or adviser is registered. Verify whether the dealer or adviser has a record of misconduct.
  3. Compare the costs of services offered by the firm you want to do business with. Make sure you understand the fees and the way your adviser makes money.
  4. Clearly define your investment goals and determine your tolerance for risk. Ask your provincial or territorial securities regulator for the brochure Getting Started. This brochure will help you develop your investment strategy.
  5. Before opening a margin account (borrowing money from your brokerage firm to buy stock) learn about the consequences. If your stock falls in price, you can lose your investment and still have to repay the loan.
  6. Diversify your investments: don’t put all your eggs in one basket.
  7. Read the prospectus of any company in which you are thinking of investing. If you need more information or don't understand the prospectus, see the brochure The Prospectus.
  8. Ask questions and take notes of your conversations with your adviser. In the event something goes wrong, these notes can protect you.
  9. Periodically review your portfolio. Give clear instructions to your adviser on the trades you want to make (name of security, number of shares, prices, etc.). As your own situation changes (death, divorce, employment, etc.), your needs will change as well. Your adviser has to know this to best serve your interests.
  10. Be skeptical of people who promise big profits. Don’t believe all the information you find on the Internet.

For more information, please contact:

Nancy Stow
Ontario Securities Commission
(416) 593-8297		 Dean Pelkey
B.C. Securities Commission
(604) 899-6880
Denis Dubé
Commission des valeurs mobiliéres du Québec
(514) 940-2163		 Bonnie Beswick
Alberta Securities Commission
(403) 297-2664
Ainsley Cunningham
Manitoba Securities Commission
(204)-945-4733		 Suzanne Ball
New Brunswick Securities Administration Branch
(506) 658-3117