Because it’s easier to tell you what not to do when it comes to your stockbroker or investment account, here are our top ten “do-nots” which, if heeded, can save you a lot of grief and money:

Do not do business with strangers who solicit your business on the telephone. Responding favorably to “cold calls” from brokers often results in financial loss.

Do not do business with people who sell only financial products developed by their employers – unless you have the ability and time to evaluate those products and compare them with similar products from competitors.

Do not purchase a financial product that has a commission, sales load or fee attached when you can purchase a similar product without such additional costs.

Do not purchase or sell options or derivatives unless you completely understand the investments and are willing and able to withstand subtantial losses.

Do not open a stock brokerage or mutual fund account unless you reviewed and clearly understand all of the language contained in the opening account documentation. Words to live by: If you don’t understand it and agree with it, don’t sign it.

Do not invest on margin unless you can afford to lose more than the value of the securities in your account. 

Do not act on any recommendation from your stockbroker before obtaining a satisfactory answer to this question: How is this transaction suitable for me?

Do not loan any money to your stockbroker or engage in any financial activity that does not appear on the monthly statement of your account.

Do not invest in any security unless you thoroughly understand the risks involved.

Do not allow yourself to be coerced into making hasty investment decisions. Representations by brokers that “there are only a few units left,” or “you need to act quickly so this opportunity doesn’t get away,” are often spurious and lead to financial loss.

What to Look For

What to Do Next