As part of Financial Literacy Month, the SEC’s Office of Investor Education and Assistance is issuing this Investor Bulletin to highlight important information on Investor.gov to help you make informed investment decisions and avoid investment fraud. If you have questions, contact us through our online question form, at help@sec.gov, or on our toll-free investor assistance line at (800) 732-0330.
Check out these links on Investor.gov for more information:
Asset Allocation and Diversification
Asset allocation means how you spread your investments across different asset types, such as stocks, bonds, and cash. The best mix for you depends on your personal risk tolerance and investing timeframe. Diversification means investing in a variety of assets to lower the overall risk of your investment portfolio. Or more simply, “Don’t put all your eggs in one basket.”
Tax-advantaged accounts are financial accounts that offer special tax benefits to encourage saving and investing for specific reasons such as retirement or education. These benefits can include tax deductions (e.g., pre-tax contributions), tax-deferred growth (no taxes until withdrawal), and/or tax-free withdrawals. Some types of tax-advantaged accounts include:
- Retirement accounts such as traditional and Roth 401(k)s and Individual Retirement Accounts (IRAs);
- Trump Accounts (an account for minors intended to facilitate early investment); and
- Education Savings Accounts such as 529 Plans for qualified educational expenses.
How Fees and Expenses Affect Your Investment Portfolio
As with anything you buy, there are fees and expenses associated with investment products and services. These fees may seem small, but over time they can have a major impact on your investment portfolio. When choosing an investment or an investment professional, make sure you understand and compare the fees you’ll be charged.
Relationship investment scams involve a “long con” where fraudsters build trust through friendship or romance over time and then convince you to put money into phony investments. Fraudsters often initiate contact online or on social media platforms — including professional networking, dating, and messaging websites/apps.
Beware of Fraudsters Impersonating Investment Professionals and Firms
Fraudsters seeking to lure investors into scams may impersonate investment professionals or impersonate firms that are registered with a state securities regulator, the Financial Industry Regulatory Authority (FINRA), or the SEC. Impersonators may go to great lengths to conceal their identities in investment scams.
