Take control of your financial future
Part 1 – Investing Basics
What is the New Brunswick Securities Commission?
Crown CorporationEstablished in 2004Double role
Getting started
Know where you’re going financiallyKnow what you’re investing inKnow who you’re dealing withKnow where to go for help
1. SETTING INVESTMENT GOALS
Know where you’re going financially
See: “Investment Planning Worksheet” in your kit
Make a plan
What do I want to accomplish?
– Contribute $10,000 toward your child’s education in 10 years
– Retire in 15 years with an income of $50,000 a year for at least 20 years
Make a plan
How much risk am I willing to take?Risk tolerance may depend on:– What is more important to you – safety or
higher growth– When you need your money– How you react to market ups and downs– If you have any debts– If you have any other sources of income
Make a plan
Am I comfortable enough to do this on my own?– Always check with the NBSC to find out if the
adviser is registered, and if the individual or firm has a record of any disciplinary action.
Make a plan
What type of investment is right for me?– Characteristics– Risk level
2. TYPES OF INVESTMENTS
Know what you’re investing in
See: “Investments at a Glance” in your kit
Types of Investments
Cash and Cash equivalents– Money in your bank account– Canada savings bonds, T-bills and money
market funds– Safe, quick access to your money– Low rates of return in comparison
Types of Investments
Fixed Income Securities– Based on debt– You are lending your money for a certain period
of time in exchange for a promise to pay you interest and to repay the “face value”
– Relatively safe– Better rates of return than cash-equivalent
Types of Investments
Equities– A.K.A. “stocks”– Part ownership– May receive dividends (profits the company
allocates to its shareholders)– Two ways to make money: Dividends, or
increase in stock value– No guarantee – companies don’t have to pay
dividends, and the value can fluctuate
Types of Investments
Investment funds– Collection of investments– Focus on specific investments– Pooling your money– Invest in a variety of investments for a
relatively low cost– Managed by a professional manager
Types of Investments
Mutual Funds– Continually issues units or shares to investors– Risk varies from low to very high– Fees and expenses deducted from the fund’s
assets.– Voting right– Not guaranteed
See: “Understanding Mutual Funds” in your kit
Types of Investments
Alternative Investments– Options– Futures– Foreign currencies (FOREX)– Hedge funds
– Most complicated types of investment– Higher-than-average risk, higher-than-average
return.
Be an Informed Investor
How will the investment make money? What are the total fees to buy, hold and sell the investment? What are the specific risks?How easy would it be to sell the investment if you needed your money right away?Does the investment fit with your goals and risk tolerance
INVESTMENT FRAUD
Spotting the Red Flags of Fraud
See: “Protecting your Money” in your kit
Red Flags of Fraud
Guaranteed high returns – no riskInsider tips – get in now!Offshore investment – tax free!Profit like the experts!Great investment opportunity – your friends can’t be wrong!
See: “Investment Fraud Checklist” in your kit
What the NBSC Can Do
The NBSC can:answer general questions about investment products and services,tell you if a firm or representative is registered in New Brunswick,tell you if an individual or firm has ever been disciplined by the NBSC,suggest options for pursuing your complaint and tell you which organization may be most helpfulenforce compliance with securities legislation, andact against market misconduct, including removing from the market those who do not comply with the law or who cheat investors.
What the NBSC Can Do (Cont)
The NBSC cannot:undo a transaction,give advice on an investment,give legal advice, orcomment on an ongoing investigation.
How you might be approached
Boiler rooms (See: “Boiler Room Scams – Could you be vulnerable?” in your kit)
Internet Fraud (See: “Investment Fraud and the Internet” in your kit)
Affinity Fraud
Reporting Fraud
www.nbsc-cvmnb.ca1-866-933-2222See: “Complaints Resource Kit” in your kit
Remember:
Do a background checkHang up on unsolicited phone callsNever respond to spamUse common senseContact us:
1 866 933-2222www.nbsc-cvmnb.ca [email protected] @NBSecuritiesCom
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