Invest Wisely: Understand the Risks, Prevent Losses
When we talk about investing, some may see it as a way to make a lot of money quickly, while others may feel hesitant due to the risks of losing money. The truth is—all investments come with risks, whether low or high. Understanding the risks associated with different investment instruments and carefully evaluating investment products based on their goals, risk tolerance, and time horizon is crucial before making any decisions.
These risks can arise from various factors, including market volatility, economic conditions, interest rates, inflation, geopolitical events, regulatory changes, and company-specific issues affecting investment performance. Before making any investment decisions, it is essential to fully understand and manage these risks as a fundamental part of smart investing.
Red flags to watch out for
While investments carry risks, they are not a shortcut to quick wealth. Be cautious of investments that sound too good to be true. If an advertisement promotes unrealistically high returns, it is likely a scam.
With the widespread use of social media for news and information, verifying the accuracy and legitimacy of investment opportunities is vital. While some legitimate financial advisors and institutions share credible investment information online, many scams are also promoted through these channels. Be particularly wary of investment opportunities pushed by unlicensed individuals or entities. Always verify the credentials of those providing investment advice and check whether they are registered with regulatory authorities.
Invest wisely
Be a smart investor. Always ensure that a capital market intermediary is registered or licensed by regulatory authorities such as the Securities Commission Malaysia, Bank Negara Malaysia, Bursa Malaysia, and Federation of Investment Managers Malaysia. Only invest with accredited companies approved by these regulators.
Before making an investment, thoroughly read all the investment documents to understand the product features, including its goals, risk factors, performance records, and procedures. It is important to ensure that you explain, provide, and receive all necessary documents, such as product highlights sheets and application forms, at the point of sale.
It is vital to assess the suitability of an investment to ensure it aligns with your financial goals and risk appetite.
When making payments, only deposit money into an authorised bank account of your financial service provider or licensed capital market intermediary. Never hand over cash to your remisiers, unit trust consultants, or any other agents or deposit money into their personal accounts. Funds given directly to the individuals may be difficult to recover when there is a dispute.
Furthermore, keep proper documentation of your investments. Do request receipts for all payments made and review periodic investment statements to ensure all transactions are accurate. This allows you to track investment performance and be aware of potential losses.
It is normal to feel uncertain about an investment and its associated risks. However, always ask pertinent questions and seek clarifications from a trusted financial advisor before making any decisions. To enhance security, consider conducting an independent risk assessment for each investment to evaluate its potential risks and rewards. By staying well-informed, you can make better investment decisions and reduce the likelihood of losses.
Know the avenue to redress
If you experience investment losses, be aware that there are various avenues to seek redress, including the courts, arbitration, or FMOS. FMOS (Financial Markets Ombudsman Service) was established as a consolidated entity from the Ombudsman for Financial Services (OFS) and the Securities Industry Dispute Resolution Center (SIDREC). It serves as a one-stop, independent platform that provides free services to resolve direct monetary disputes up to RM250,000 between financial service providers and capital market intermediaries and financial consumers and investors.
