7.3.6 Questions to ask about an investment

From: Financial Consumer Agency of Canada

Before you invest, ask questions. Take notes of the answers.

It's always better to get the answers to your questions before you invest than to discover a misunderstanding later. If you feel your questions are not welcome, or the answers are not clear, look for another advisor and another investment. Intimidation and lack of information are warnings that your money may be at risk.

Use the list of questions below to review an investment you are considering or already own. The questions do not have a single right answer, but the answers will help you evaluate the investment.

  • Answer all the questions you can (you may not have answers for all the questions).
  • If you don't know the answers to all the questions, do you know where to get them?
  • If you cannot get all the answers, how will you decide whether or not to buy the investment?

Questions to ask about an investment

1. What am I investing in? What kind of investment is it? Who is promoting the investment and what is their background? Can I get independent information about it?


2. What risks does the investment face? How much could I lose?


3. What are the fees and charges, including sales commissions? Are there ways to reduce or avoid the fees?


4. Are there any guarantees? What happens if the company offering the investment goes bankrupt?


5. How will taxes affect my return on this investment?


6. When can I get my money back? Are there penalties or other limits for early withdrawal?


7. Are all my eggs in one basket? (If the answer is yes, how can I diversify my investments?)

(Adapted from "The ten questions to ask your advisor before investing your hard-earned cash," by Lauren Thompson, The Times (London), August 29, 2009).

See the video, How to choose investments.

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