Savings-How to Avoid the Pit of Online Financial Products-News

Market management officials have again warned about the risks of online investment. Advice to avoid the worst.

Buy stocks, titles or company stocks, crowdfunding (crowdfunding), investing in various products (wine, forests, etc.), buying cryptocurrencies (bitcoins, etc.), forex (forex market) Investment etc. All of these operations that can now be performed on the Internet without contact with financial advisors, such as the joint press release of the Financial Markets Authority (AMF) and Banking Institutions (ACPR) dated April 21, 2022, It poses a very serious risk. .. The latter specifically points out that it identifies many shortcomings in the information provided and collected from customers. Not to mention the regular warnings from these agencies regarding the fraud situation.

Check the capabilities of your service provider

This is the first precaution and there are many scammers, so-called financial investment advisers, on the Internet. The Financial Markets Authority publishes a whitelist and blacklist of service providers. The first includes companies that have licensed to sell financial instruments, and the second includes all illegal businesses identified by the authorities. If the operator belongs to the first list, this does not mean that all attention must be given up, but if it is on the second list, it will definitely escape the site.

Full understanding of risk

This point is essential. Expecting profits, too many consumers tend to focus on potential profits rather than real risks. And even more so, as many sites encourage them with this bad reasoning.Money “Risks are generally less noticeable, easier to read and understand.”, Underline the supervisory authority. They often actually appear at the bottom of the page, usually in a smaller font format (or at least smaller than the font used in the current text). Rule 1: Be sure to read all references to the site, especially small print references! Also, be careful not to stop reading immediately. In fact, AMF has confirmed on some sites that the risk is only shown after the link that allows the product to be subscribed … In these cases, the customer tends to be unaware of this important data. ..

Second advice: Understand what you have read. Specifically, it is essential to accurately quantify the maximum risk of potential economic loss. Can I lose all the capital I have invested? Or a fraction, which in this case? Can the loss be greater than the investment amount? Pay particular attention to this last risk. Many individuals are tempted by online forex, but do not measure the degree of commitment. Due to the leverage effect in this market, you can lose far more than you have invested.

Pay attention to the price

Again, it is not clear to dominate. AMF states that many favorable prices are offered in advertising offers. The problem, again, there are often important details formulated in small print. Therefore, preferential rates may be subject to a given number of orders. Or only the first operation.

It is essential to have this information as clearly as possible. This is not always the easiest, as the terminology can vary from site to site or can be very technical. Don’t hesitate to take a small note to write down everything. The exact price for each case, as well as the amount of risk in the euro. In this exercise, you need to look for pricing conditions that may be hidden in the references or descriptions that you must learn to decipher.

Don’t rely on past performance

Many financial product providers are attracting customers with excellent, steadily rising performance curves. But in general, without specifying whether these benefits take into account all fees, fees, and costs … these important “details” are scattered in several places. It is imperative to read every section of the site as there are so many! It is also necessary to check the age of the curve. Significant returns over a year or two don’t make much sense. Performance curves only really start to take an interest after at least 6-8 years.

Other suspicions

Here are some other pitfalls to avoid by making an effort to write down what we understand about the general terms and conditions of a subscription agreement.

  • Conditions and duration of withdrawal;
  • Guarantee nature (especially for the most speculative investments such as Bitcoin and Forex, which are very volatile markets and do not have prior guarantees or capital protection);
  • Amount of committed capital;
  • Duration of commitment;
  • Payment Terms ;
  • etc