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Know the right questions to ask
Regardless of your experience in investing, it is always important to ask questions before committing to an investment. Remember that it is never too early or too late to start asking questions, so don’t feel intimated if you do not understand something about an investment.
Below is a list of suggested questions to ask before entering an investment:
Is this investment under an entity that is registered or licensed by a regulatory body such as the Cayman Islands Monetary Authority?
Does this investment match my goals?
Where can one view disclosure of fees?
What are the total fees to purchase, maintain and sell this investment?
What methodology is used to determine performance of funds?
How are returns guaranteed?
Can I monitor the investment or receive regular updates?
Could I lose all my money if my investment fails?
What does one know about the responsibilities of the key service providers, included related parties?
How liquid is this investment?
What are the specific risks associated with this investment?
How frequently do I get statements?
How long has the programme been in operation and have all participants received their returns?
Is there a single person tracking all cash-flows? What qualifications does that person have to manage a programme like this? Do they hold any financial services licenses?
What happens if a member is unable to make their contribution?
How does the programme make money?
Where can I get more information about the programme in writing?
Are the administrators compensated for their services?
A good tip is to make sure you understand an investment well enough to explain it to someone else. Ask as many questions as possible so you get a clear understanding of what you may be investing in.