Preparing for an Investment

There is no best investment product for everyone. What is important is to determine your investment objective and needs, then assess which product is suitable for you. Do not rush through the process of investing. Take time to understand the product and consider whether it meets your needs before you finalize. Read all documents and forms before you sign anything. Remember that you may have to bear fees, expenses and/or investment losses if you change your mind about purchasing the product. There are also key questions that you should consider before committing to any investment product such as structured deposits, unit trusts, investment linked insurance and life insurance policies.

Investing can be confusing and difficult at times. Before you make any decisions, ask yourself these 10 helpful questions:

  1. What is my investment objective?
  2. How much can I afford to invest, after setting aside funds for daily needs and savings to provide for emergencies?
  3. Do I intend to invest in one single sum or fixed sums on a regular basis (e.g. monthly, quarterly, annually)?
  4. How much return on investment do I need, after taking into consideration the effects of inflation, to meet my investment objective?
  5. Does the product I am considering meet my investment objective and needs? Which benefits are guaranteed and which are not?
  6. What is the potential return offered? Is it realistic?
  7. When are the proceeds payable? Can I afford to stay invested for that duration? Do I need the proceeds earlier?
  8. Am I comfortable with the level of risk that comes with the product I am considering? How much losses am I prepared to incur? What are the potential losses in the worst-case scenario for the product I am considering?
  9. Have I read and understood all the information, including the prospectus / term sheet / benefit illustration and product summary, contracts, warnings, exclusions and disclaimers, terms and conditions, relating to the product I am considering?
  10. Are there alternative products that offer similar benefits and risks to those of the product I am considering?

Source: moneysense.gov, Key Questions You Should Ask Yourself before Buying an Investment Product