With a new year upon us, we thought we’d look back at the most popular questions investors have been asking over the past year. Here are the most popular investor tips for 2017:

Initial Coin Offerings (ICOs)

ICOs made a big splash in 2017. With the Bitcoin boom and subsequent introduction of other cryptocurrencies, Initial Coin Offerings created quite a buzz among individual and institutional investors. While ICOs can be an exciting and legitimate investment opportunity, but cutting-edge technologies associated with these offerings can make them subject to risks of fraud. Check out our past blog on ICOs for red-flags to avoid when considering this type of investment. Find out more about ICOs here.

Robo-advisers

The availability and use of robo-advisers has been steadily increasing throughout many investment platforms as online trading and investing continues to grow. Robo-advising platforms allow investors more direct control over their portfolios and are often available at lower costs than traditional adviser services. Find out more here.

Knowing Your Order Types

When buying or selling a stock or security through a brokerage firm, you should be able to understand the different order types associated. You can read more about different order types here.

Securities-based Crowdfunding

This form of crowdfunding allows the general public to invest in start-up companies at an early stage. Investors are essentially able to invest with a company at the ground-floor, while it is still in the capital-raising stage. However, there are limits to how much you can invest in securities-based crowdfunding opportunities in a calendar year. Read more about investment-based crowdfunding here.

Celebrity Endorsements

We’ve all seen ads for products featuring celebrity endorsements and it’s no different with investment-based products. While celebrity endorsements are meant to lend credibility to a product, it by no means ensures a product’s legitimacy or usefulness. This is especially true with investment products. Find out more here.

Understanding the New T+2 Settlement Cycle

The SEC shortened the standard settlement cycle from T+3 to T+2. The change affects most investment transactions done through a brokerage firm. Find out more here.

Lost in Translation

The error, it seems, occurred in the electronic feed sent out to retail customers which was inconsistent with the firm’s actual reports. According to the FINRA statement, “[Citigroup]…failed to timely correct the inaccurately displayed ratings, despite numerous red flags alerting the firm to ratings inaccuracies for several securities”.

Investor Resources

Citigroup’s stock ratings snafu doesn’t appear to be the result of willful misdirection, but the firm’s slow response and passive consent to FINRA’s findings show how large-scale investment banks don’t often have the best interests of their clients and consumers at heart. For more details on FINRA’s findings, you can read the full statement here. If you have questions about investment-loss recovery or ways you can protect your investment, contact our legal team.

With another new year just around the corner, you may be thinking about financial planning as a part of your New Year’s resolutions. For those of you with a newborns or young children in the family, you may be thinking about opening a college savings plan. A 529 account can be a great way for parents and grandparents to start a college savings plan. Here’s some commonly asked questions about opening a 529 account.

Who can use a 529 savings plan?

529 accounts can be used to start college saving for any student or future student in your family, including yourself.

When should I start my college savings plan?

Obviously, the best thing you can do is to start saving right away. However, it is never too late to start a 529 account for you or a loved one planning on attending college or a higher education institution.

Is a 529 account the only college saving plan available?

No, you don’t have to open a 529 account to start saving for college. There are several other college saving options available. Each has it’s advantages and disadvantages and it may be wise to consult with a financial or tax adviser when finding a saving plan that fits your needs.

College savings plan or prepaid tuition plan?

Along with the traditional, 529 college savings plan, some state and private colleges offer prepaid tuition plan options. With prepaid tuition plans, you can purchase credits towards college and university tuitions and fees at current prices. Keep in mind that prepaid tuition plans are typically subject to requirements such as mandatory residency requirements and you can only apply your prepaid credits to approved colleges and/or universities. While a traditional college savings plan can be more flexible in terms of requirements and restrictions, it’s important to remember that, as with any investment, it is subject to loss-risks.

Investor Resources

If you’d like more details on 529 accounts and other college savings plans, check out the College Savings Plan Network for information and educational resources.

There’s a new online scam targeting investors. The Securities and Exchange Commission (SEC) has issued an alert to investors to watch out for Paid-to-Click (PTC) fraud. PTC scams involve fraudsters duping investors out of money for purchasing online advertisements. With Paid-to-Click fraud, investors are targeted by scammers who promise a share of profits for the upfront purchase of ad bundles and packages. Some scams may promise easy financial returns and online advertising space while others simply promise returns in exchange for an upfront fee alone. While PTC investment opportunities can be a legitimate source for passive income, you need to be aware of the risks of paid-to-click fraud. Here are some red-flags to watch out for if you are approached with a PTC investment opportunity.

Promise of easy money

We all know there’s no such thing as money for nothing. If you’re approached with a paid-to-click opportunity promising easy money in for minimal investment on your part, it’s most likely a scam.

Investments requiring money up front

Most PTC opportunities are just that: opportunities. No legitimate paid-to-click investment should be asking you for money upfront, even if it’s for a membership or subscription plan.

Lack of product or service revenue

Look up the financials of any company offering you a paid-to-click opportunity. If the company is legitimate, you should be able to find revenue for the goods or services advertised. If you only find incoming revenue from existing members, it’s more than likely paid-to-click fraud.

False or transient business address

A good way to check that any company is legitimate is to verify its listed business address. It should have a verifiable physical location. If the company lists offices remotely, call the virtual office service provider and enquire whether the company’s presence can be confirmed.

Issues with funds withdrawals

If you have any issues withdrawing funds from your investment account, this could be a major red flag. If you are unable to withdraw funds or the company requires you to reinvest your profits, it could mean that there is not enough money to pay off existing investors. Unfortunately, this red flag might come to late for some investors. If possible, request a review of the company’s investment plan(s). Make sure there are established procedures for repayments and withdrawals.

Investor Resources

For more information on paid-to-click fraud or to report a scam, see the full SEC bulletin. If you have questions about investment-loss recovery resulting from paid-to-click fraud, contact our team.

What is Robo-advising?

We’ve talked before about using robo-advisors to facilitate trading and help investors organize portfolios, but here’s a quick recap: robo-advisor services are billed as low-cost, user-friendly systems that encourage first-time and novice investors to take a hands-on approach to growing their investment portfolio. Robo-advising allows investors to make investment decisions and transact deals via automation (meaning little to no interaction with a human advisor).

The Wells Fargo ‘Intuitive Investor’

Wells’ robo-advising plartform, dubbed ‘Intuitive Investor‘, is the 3rd automated platform offered by a major Wall Street brokerage. Bank of America and Raymond James Financial both launched their own services earlier this year. Intuitive Investor allows first-time investors to begin with relatively low capital risk and comparatively low commissions. Opening an account requires a minimum $10,000 investment and offers advisory fees at a half of a percent annually.

Tips if you’re considering opening a robo-advising account:

While robo-advising does offer you more individual oversight and control over your investments, that also comes with an increased responsibility to practice smart, secure investing. Automation can be great, but an increased reliance on computers for file storage and transaction comes with increased risk of cyber attack. It’s even more important for you to closely track your portfolio and transactions if you’re going to use a robo-advisor. Contact your brokerage immediately if you notice anything out of the ordinary in your account. Depending on your investment goals, it may also be in your best interest to maintain the services of a traditional investment advisor for either part or all of your portfolio.

Investor Resources

For more info on managing your portfolio using a robo-advisor, check out the SEC’s full investor bulletin. Read more about Wells Fargo’s robo-advising platform here.

Once you understand how tax laws apply to your capital losses, you will quickly see the benefits of reporting them. You will be able to form strategies that actually take advantage of stock losses ahead of time. Once an investment starts to head south, you’ll be able to make the right decisions to mitigate that loss.

Stock Loss Deductions

There are two types of reportable stock loss deductions:

• Short term losses
  • stocks held for less than one year
• Long term losses
  • Stocks held for one year or longer

While short and long term losses mirror capital gains in how they are categorized, the two function very differently. With capital gains, taxes are assessed based on how long you held on to a particular stock before selling. Short term gains are taxed at regular levels while long term gains are taxed at a much lower rate.

Advantages of Stock Loss Deductions

There are many ways you can benefit from reporting stock loss deductions on your tax return. You can use loss deductions to off-set taxes owed on gains. You can even carry over loss deductions into future years. If you have no capital gains taxes to report, losses can be used to deduct from your regular income. While you’re not going to recoup the total amount of a loss, consider deductions as a sort of consolation prize. Eating a stock loss is never fun, but at least deductions make it a little bit easier of a pill to swallow.

Reporting Deductions

As with all deductions, there are limits to reporting stock loss. The IRS requires investors to follow specific rules when it comes to reporting your losses. These apply differently depending on what type of loss you are reporting… Remember when we said there were two types of capital losses? Well there are actually two more. While short and long term losses define the loss itself in terms of how long it was held, losses are actually divided into two additional categories:

• Realized losses
  • When an investment is sold at a price lower than the initial purchase
• Unrealized losses
  • When an investment is held even after its value has fallen under that of initial purchase

Both types of losses must be reported on your tax return, but only realized losses can be applied as a deductions.

Deduction Limits

There are limits to what, how often, and when you can apply loss deductions towards. Most investors use stock loss deductions to offset taxes on short term gains. Since you are taxed on short term gains at a higher rate than long term gains, it makes sense to apply everything available to minimizing tax owed on those gains. Stock loss deductions can also be used to offset your regular income taxes. While The IRS limits this to $3000 in income tax deductions for a given tax year, if you have reported losses for that year greater than that amount, they can be used to offset income tax each year until the amount expires.

Questions About Stock Loss Deductions?

This just provides a basic overview of stock losses, their tax advantages and limits. There are more limits that apply depending on the type of investment, the manner in which it is sold, and to whom the investment is sold. If you have more questions about reporting stock losses as potential deductions, it’s best to speak with a financial adviser, accountant or tax attorney. A tax attorney specializing in stock investment-loss recovery can be a great resource available to you.

• mortgage brokers
• investment bankers
• credit bureaus
• debt collectors

Now these entities should be making sure you receive fair, equitable options for your finances and investments, instead they are taking advantage of the elderly and carrying out senior financial scams for their own benefit. Since 2011, the Consumer Financial Protection Bureau (CFPB) has received over 70,000 complaints of or relating to senior financial scams. The complaints outline predatory practices directed at elderly citizens to disenfranchise and or intimidate.

Don’t Fall Victim to Senior Financial Scams

The elderly are targeted because scammers and fraudsters see them as easy targets. Advanced age or the presence of medical disabilities make many seniors susceptible prey. You can prevent senior financial scams. If you are over the age of 60 and you still manage your financial portfolio, take steps to educate yourself against these predatory practices. If you manage the finances for a loved one, who can no longer look after their own, it becomes especially important to protect those assets. As a designated trustee, you are the only one standing between your loved one’s financial security and the threat of fraud.

Investor Resources

To read the full report on senior financial scams, click here. Check out our past blog on tips for preventing elder financial abuse.

Or Litecoin?

Or Dash?

What about platforms like Ripple or Zcash?

A New Frontier

Cryptocurrency investing has risen from an underground, financial trading outpost for techies to a full-blown investing phenomenon. Cryptocurrency has emerged as an innovative and major trading platform. However, the rapid rise and deeply technological nature of this type of investing has left it a largely foreign concept to many traditional investors. In fact, cryptocurrency is very much a new frontier, even for those familiar with it. While cryptocurrency investing can be an exciting new platform, the industry around cryptocurrency is still establishing itself. As a recent Reuters article reports, cryptocurrency investing is still very much a Wild West for investors. Sufficient, standardized regulation really has yet to take hold, and with the diverse array of available cryptocurrencies, it has proven difficult to police. If you’re considering cryptocurrency investing, you should not let potential risks deter you. After all, any investment type comes with risks. What’s important to remember is to practice smart investing. There is a learning curve, but if you practice smart investing and take proper measures to protect your investments, you can safely mitigate those risks.

Tips for Safe Cryptocurrency Investing

• Familiarize yourself with the cryptocurrency marketplace
  • Understand basics of investing and trading
• Research available cryptocurrencies
  • Cryptocurrency varies widely in terms of how it is designed, distributed and exchanged
  • Available offerings differ in terms of traceability, anonymity and security
• Research and verify trading and exchange platforms
  • Don’t lose your investment to fraudulent traders or fake exchange platforms
  • Make sure you’re trading on a secure and verified platform

Investor Resources

You can read the full Reuters special report on cryptocurrency exchange risks here. If you’ve been approached with an investment opportunity for an Initial Coin Offering (ICO), check out our past post on what to know before investing in an ICO.

Common Buy-and-Sell Order Types

Market Order

Market orders are orders to buy or sell a stock at the best available price, i.e. market price. While market orders are typically executed immediately, it’s important to know that the price something last traded at is not necessarily the price you will get.

Limit Order

A limit order requires that a stock be bought or sold at a specific price or better.

• Buy limit orders can only be executed if the order is at limit price or lower
• Sell limit orders can only be executed if the order is at limit price or higher

It’s important to note that limit order may not always be executed. They depend on the market price reaching the set limit price.

Stop Order

Stop orders, also called stop-loss orders are orders to buy or sell when a stock reaches a specified value. When that value is reached, the order then acts as a regular market order.

• Buy stop orders are entered at prices above current market prices
• Sell stop orders are entered at prices below current market prices

Investor Resources

These represent only the three most common order types available. You can also combine order types to further suit your investing needs. To learn more about different order types and more on these common order types, read the full SEC bulletin. Check out our archives for even more news and tips!