Welcome to Personal Investing
HOW TO INVEST
SMARTLY ON THE-WEB, AVOIDING INTERNET SCAMS
AND COSTLY INVESTING MISTAKES
Securing Your Information - The Internet
serves as a powerful investing tool for traders and investors. But hackers
and identity thieves can wreak havoc on your personal
finances unless you take steps to protect the security
of your account numbers, passwords, and PINs. And
investment opportunities that sound like no-brainers
all too often turn out to be frauds.
Helpful Tips to Investing Wisely Online
Protect your personal information online.
It’s valuable. If you get an email or pop-up
message asking for personal information, don’t
reply or click on the link in the message. Email is
not a secure way to transmit personal financial information,
and you don’t want to risk downloading a virus
or piece of spyware that can log your key-strokes
when you type in an account number, password, or PIN.
The safest course of action is not to respond to requests
for your personal or financial information. If you
believe there may be a need for such information by
a company with which you have an account, contact
that company directly in a way you know to be genuine.
Don’t access your online investment
account until you have checked for indicators that
the site is secure, like a key or closed padlock icon
on the browser’s status bar or a website URL
that begins “https:” (the “s”
stands for “secure”). You may also view
the persons or firms identity cards.
Unfortunately, no indicator or identification cards are completely foolproof; some scammers have even forged security icons.
Protect your login passwords. Keep your passwords
in a secure place, out of plain view, and avoid storing
them on your computer. Don’t share your passwords
on the Internet, over email, or on the phone. Your
Internet Service Provider (ISP) should never ask for
your password. And if you access your accounts in
a public place, be sure to position yourself so that
no one can see your hands or your screen as you type
your PIN or password.
In addition, hackers may try to figure
out your passwords to gain access to your computer.
You can make it tougher for them by:
• Using passwords that have
at least eight characters and include numbers or
symbols. The longer your password is, the tougher
it is for a hacker to discover it.
• Avoiding common words: some
hackers use programs that can try every word in
• Not using your personal information,
your login name, or adjacent keys on the keyboard
• Changing your passwords regularly
(at a minimum, every 90 days).
• Not using the same password
for each online account you access.
signup with a good
identify theft protection service
Use anti-virus and anti-spyware software,
and a firewall, and keep them up-to-date. These programs
are a must-have if you make financial transactions
online. Look for anti-virus software that removes
or quarantines viruses, and for spywar
anti-spy software which can undo changes spyware makes to your system;
check that both programs will update automatically.
If your firewall was shipped in the “off”
mode, be sure to turn it on and set it up properly.
It’s also important to keep your operating system
up-to-date with the latest security patches.
Try to use
secure video (if warranted and available). Using
secure video can make it even harder for a hacker
to access online investment accounts. Small number-generating
devices offer a second layer of security — a one-time pass-code
that typically changes every 30 or 60 seconds. These
unpredictable pass-codes can frustrate identity thieves.
Use extra caution if using Public Computers
or Wireless Connections. Avoid using public or other
shared computers to access your financial accounts online.
If you do use one, when you finish a session, log off completely,
delete your “temporary internet files,”
and clear your Internet history.
Many cafés, hotels, airports,
and other public establishments offer wireless networks
for use by their customers. These “hot spots”
are convenient, but they may not be secure. Ask the
proprietor what security measures are in place. Regardless,
if you have personal, financial, or other sensitive
information on your computer, you may decide that
accessing your online investment account — or
for that matter — through a public wireless
connection isn’t worth the security risk.
Log Out Completely. Closing or minimizing
your browser or typing in a new web address when you’re
done using your online trading account may not be enough to
prevent others from gaining access to your account
information. Instead, click on the “log out”
button to terminate your online session. In addition,
don’t permit your browser to “remember”
your username and password information. If this browser
feature is active, anyone using your computer will
have access to your financial and investment account information.
How to Avoid Online Investment Scams
Independently Verify Claims. Never, ever, make an
investment based solely on what you read in an online
newsletter, bulletin board posting, or blog —
especially if the investment involves a small, thinly-traded
company that isn’t well known. It’s easy
for a company or its promoters to make grandiose claims
about new product developments, lucrative contracts,
or the company’s financial health. Before you
invest, make sure you’ve independently verified
those claims. Get started by turning to unbiased sources,
such as the U.S. Securities and Exchange Commission
(SEC), your state securities regulator, and securities
industry self-regulatory organizations (including
NYSE, Amex, and Nasdaq).
Do Your Homework. Offers to sell securities must
be registered with the SEC or eligible for an exemption
— otherwise the offering is illegal. To see
whether an investment is registered, check the SEC’s
EDGAR database and call your state securities regulator
for more information about the company and the people
promoting it. The fact that a company has registered
its securities and files reports with the SEC doesn’t
guarantee the company will be a good investment. Likewise,
the fact that a company hasn’t registered and
doesn’t file reports doesn’t mean the
company is a fraud. But many investment frauds, including
online scams, involve unregistered securities —
so always investigate before you invest.
Be Skeptical of Self-Provided References. Fraudsters
will falsely assure you that an investment is properly
registered with the appropriate agency and purport
to give you the agency’s telephone number so
that you can verify that “fact.” Sometimes
they will give you the name of a real agency —
other times they will fabricate one. But even if the
agency does exist, the contact information they provide
invariably will be false. Instead of speaking with
a government official, you’ll reach the fraudsters
or their colleagues — who will give the company,
the promoter, or the transaction high marks.
Thoroughly Check Out Promoters and Company Officials.
Many fraudsters are repeat offenders. Whenever the
SEC sues an individual or entity, the agency issues
a “litigation release.” Litigation releases
going back to 1995 are available on the SEC’s
website, www.sec.gov — simply run a search for
the promoter, his or her company or newsletter, the
company being touted, and its officers and directors.
You also can check the licensing and disciplinary
history of the person or entity promoting the opportunity
by using NASD’s free Broker-Check service or
by calling your state securities regulator.
Consider the Source and Be Skeptical.
Whenever someone you don’t know offers you a hot
stock tip, ask yourself: Why me? Why is this stranger
giving me this tip? How might he or she benefit if I
trade? Never forget that the person touting the stock
may well be an insider of the company or a paid promoter
who stands to profit handsomely if you trade.