The SEC’s Office of Investor Education and Advocacy, the Commodity Futures Trading Commission, FINRA (the Financial Industry Regulatory Authority), and NASAA (the North American Securities Administrators Association) are issuing this Investor Bulletin to highlight the key messages of World Investor Week, a week-long, global campaign promoted by International Organization of Securities Commissions to raise awareness about the importance of investor education and protection.  During World Investor Week (October 2-8, 2017), individual investors, investment professionals, teachers, parents, researchers, and other interested individuals, firms, regulators, and organizations are encouraged to make a special effort to communicate these key investor education messages:

• ALWAYS VERIFY THAT AN INVESTMENT PROFESSIONAL IS LICENSED

Much of the investment fraud we see today is committed by people who claim to be “investment professionals” but are not properly licensed and registered.  Investor.gov, SmartCheck.gov, and BrokerCheck, all offer free and simple search tools that allow you to find out if your investment professional is licensed and registered, and if he or she has a disciplinary history or customer complaints.  State securities regulators also provide detailed information about your investment professional.  Doing a background check is a great first step toward protecting your money. 

• DO YOUR RESEARCH BEFORE INVESTING

Ask questions about financial opportunities and check out the answers with unbiased sources.  This can help you make informed choices and avoid fraud.  Investors should always check whether an investment is registered with the SEC by using the SEC’s EDGAR database or contacting the SEC’s toll-free investor assistance line at (800) 732-0330.  In addition, be sure to visit Investor.gov or FINRA.org/investors before making an investment decision to learn more about common investment products, such as stocks, bonds, mutual funds, or exchange-traded funds (ETFs), or find out more about the risks and unique characteristics of a wide variety of investment products.

• UNDERSTAND THE IMPACT OF FEES

It can be costly to ignore fees associated with buying, owning, and selling an investment product.  It is important that investors understand all fees.  Expenses vary from product to product, and even small differences in costs can mean large differences in earnings over time.  For example, an investment with high costs must perform better than a low-cost investment to generate the same returns.  Use FINRA’s Fund Analyzer to compare expenses among fund investments (mutual funds, ETFs and exchange-traded notes) – or among different share classes of the same fund.  This can help you understand the impact fees have on your investment over time.

• KNOW THAT ALL INVESTMENTS HAVE RISK

Every investment carries some degree of risk, and the potential for greater returns often correlates with greater risk.  If you plan to buy securities – such as stocks, bonds, mutual funds, or ETFs – it’s important that you understand that you could lose some or all of the money you invest.

• AVOID “GET RICH QUICK” AND “CAN’T LOSE” SCHEMES

Promises of high returns with little or no risk are classic warning signs of fraud.  Smart investors avoid so-called “can’t miss” and “guaranteed risk-free” investment opportunities.  Better yet, report them to the SEC, FINRA, your state regulator, or the CFTC.

• RECOGNIZE THE POWER OF COMPOUND INTEREST

Albert Einstein reportedly described compound interest as “the most powerful force in the universe.”  Allowing your principal and accumulated interest to grow over time is an important part of building wealth.  If you are investing or saving toward a goal, or just want to learn about how your money can grow under various hypothetical scenarios, take advantage of Investor.gov’s compound interest and savings goal calculators.  

If your goal is to save for retirement, check out FINRA’s Retirement Calculator to help stay on target for a secure retirement.

• RECOGNIZE THE IMPORTANCE OF DIVERSIFICATION

Diversification – a strategy that can be neatly summed up as “Don’t put all your eggs in one basket” – can help reduce the overall risk of an investment portfolio.  By picking the right mix of investments, you may be able to limit your losses and reduce the fluctuations of your investment returns without sacrificing too much in potential gains.  Some investors achieve diversification through ownership of mutual funds or exchange-traded funds.

• PLAN FOR AND INVEST ACCORDING TO FUTURE NEEDS AND GOALS

Before you make any investing decision, sit down and take an honest look at your entire financial situation, especially if you’ve never made a financial plan before. An important first step to successful investing is figuring out your goals and risk tolerance, either on your own or with the help of a financial professional.

• RECOGNIZE THE BENEFIT OF REGULAR INVESTMENT

Many investors benefit from getting into the habit of paying themselves first.  An easy way to do this is to set up regular, automatic deductions from a paycheck or bank account into a savings or investment account.  These regular, automatic deductions will keep you on track toward your long-term financial goals. 

How can I get involved in WIW to help others? 

One of the best ways to get involved is to reach out to individuals and audiences with whom you normally interact.  For example, if you are a teacher, can you incorporate one of the key messages into one of your student lesson plans?  As a parent, can you start a conversation at a family meal about the importance of investing in your life?  For organizations, consider adding links to Investor.gov and FINRA.org/investors to your websites and in email and social media communications.

ADDITIONAL RESOURCES

• For more information about World Investor Week, visit www.worldinvestorweek.org.  

• If you have questions about investing, call the SEC’s investor assistance line (800) 732-0330 or email Help@SEC.gov(link sends e-mail).  You can also contact FINRA at (301) 590-6500 or investoreducation@FINRA.org. 

• NASAA provides a wide range of free investor education material, including multilingual resources.  For details, visit www.nasaa.org/investor-education.  

• You can also report a problem concerning your investments or report possible securities fraud to the SEC, or to your state or provincial securities regulator

• For information about financial professionals, visit FINRA’s Where Do I Start:  How to Find and Work with an Investment Professional, Fighting Fraud 101, or Investor.gov’s Top Tips for Selecting a Financial Professional.