<![CDATA[securities investing - Savage Villoch Law]]> https://www.savagelaw.us/blog/tags/securities-investing/ Wed, 06 Nov 2024 17:43:54 GMT en-us <![CDATA[Investing 101: Understanding Index Funds]]> https://www.savagelaw.us/blog/investing-101-understanding-index-funds/ https://www.savagelaw.us/blog/investing-101-understanding-index-funds/ Sat, 29 Sep 2018 17:22:57 GMT Understanding Index Funds There’s a lot of ways you can get involved in securities investing. Some of the most popular methods are through the use of what are called index funds. An index fund is a type of mutual fund that tracks the performance and returns of a market index. You are probably familiar with…

]]> Understanding Index Funds

There’s a lot of ways you can get involved in securities investing. Some of the most popular methods are through the use of what are called index funds. An index fund is a type of mutual fund that tracks the performance and returns of a market index. You are probably familiar with stock and security market indexes like the S&P 500 or Russell 2000 index. Because a market index essentially acts as a barometer to track and project returns for a collection of similar securities, you are not able to directly invest in them. However, since index funds seek to track the returns of market indexes, you are able to use them as a sort of indirect investment channel.

How Index Funds Work

Typically index funds operate in one of two different ways:

  • the fund will invest in all of the securities in a single market index
  • the fund takes a sampling of available securities for an index

The value of securities included in a market index is determined either by a company’s market cap or by its price-per-share.

Traditional vs. Non-Traditional

While most index funds seek to track market indexes, there are other types funds that use complex or custom-built indexes to select investments. These are known as non-traditional index funds. You may find them more suited to your individual investment goals than a traditional fund.

Does an Index Fund Work for You?

Most index funds follow a passive rather than active investment plan. They are most often utilized by investors looking to maximize long-term returns. This also means, in most cases, that an index fund has less costs and fees associated with it than an active investment account. Due to their passive nature, fund managers need to devote less hands-on time and resources than active funds.

Associated Risks

As with any form of investment, there are associated risks. Understanding these risks can go a long way in helping you mitigate them early on. In general, index fund securities are subject to the same risk factors as the market index it tracks. There are also other risks of which you need to be aware:

  • An index fund may have less flexibility than a non-index fund. It may be less apt to accommodate price declines in the securities it tracks.
  • The tracking of the index fund may not be accurate. For instance, if a fund only tracks a sampling of available securities in a market index, it is not representative of the entire index.
  • The index may underperform due to any of the above reasons. It also may underperform if subject to excessive fees and costs.
Know Before You Invest

Before you decide to invest in an index fund, make sure you have a clear understanding of not only what securities the index fund tracks, but also the associated costs and fees. You’ll also want to make sure the fund manager or financial professional offering the investment is properly licensed and in good standing. Here are some common questions you should be asking – both about the fund itself and the fund manager:

Questions about the investment
  • Is this investment product registered with the SEC or my state securities agency?
  • Does this investment match my investment goals? Why is this investment suitable for me?How will this investment make money? (dividends? interest? capital gains?) What could cause this investment to increase or decrease in value? (for example, changes in interest rates, real estate values, or market share?)
  • What are the total fees to purchase, maintain, and sell this investment?
    • Are there ways that I can reduce or avoid some of the fees that I’ll pay, such as purchasing the investment directly?
    • After all the fees are paid, how much does this investment have to increase in value before I break even?
Questions for your financial professional
  • Are you registered with our state securities regulator? Have you ever been disciplined by the SEC, a state regulator, or other organization (such as FINRA) or one of the stock exchanges?
  • How long has your firm been in business? How many arbitration awards have been filed against your firm?
  • What training and experience do you have? How long have you been in the business? What other firms have you been registered with? What is the status of those firms today?
  • Have you personally been involved in any arbitration cases? What happened?
  • What is your investment philosophy?
  • Describe your typical client.
    • Can you provide me with some names and telephone numbers of your long-term clients?
  • How do you get paid? By commission? By the amount of assets you manage? By another method?
  • Do I have any choices on how to pay you? Should I pay you by the transaction? Or a flat fee regardless of how many transactions I have?
  • Do you make more if I buy this stock, bond, mutual fund, or ETF, rather than another? If you weren’t making extra money, would your recommendation be the same?
  • Are you participating in a sales contest? Is this purchase really in my best interest?
  • You’ve told me what it costs me to buy this stock, bond, mutual fund, or ETF; how much will I receive if I sell it today?
  • Where do you send my order to be executed? Can we get a better price if we send it to another market?
  • If your broker changes firms, ask: Did they pay you to change firms? Do you get anything for bringing me along?

Additional Investor Resources

As you may have noticed, many of the above questions have universal applications in the investment world. You should always be doing your due diligence when it comes to investment decisions, regardless if it seems like a safe bet or not. By not asking questions, you subject yourself to unnecessary risks like fraud that can be devastating to your portfolio. If you’ve been the victim of securities fraud or stockbroker misconduct, contact our team.

]]> <![CDATA[3 Tips for Protecting Your Investments Against Ransomware]]> https://www.savagelaw.us/blog/3-tips-protecting-investments-ransomware/ https://www.savagelaw.us/blog/3-tips-protecting-investments-ransomware/ Fri, 23 Jun 2017 16:58:01 GMT There’s a new wild west. The internet age has brought bank robbers from the prairie plains to the world wide web. As investors and brokerage firms increasingly rely on computers for processing trades and managing portfolios, the risk of your investment data increases too. One of the biggest threats to online data is ransomware. What…

]]> There’s a new wild west. The internet age has brought bank robbers from the prairie plains to the world wide web. As investors and brokerage firms increasingly rely on computers for processing trades and managing portfolios, the risk of your investment data increases too. One of the biggest threats to online data is ransomware.

What is Ransomware?

Ransomware is a computer virus that targets your computers digital files and literally holds them for ransom until a payment is sent for their release. So far this year, we have already experienced two widespread ransomware attacks: the WannaCry virus, back in May, and now the Petya virus in June. While these viruses are sophisticated, there are steps you can take to protect you investments against ransomware attacks.

Install/Update Anti-virus Software

It may be a nuisance, but every time you see a notification that your anti-virus software needs an update, run it. These updates are extremely important to keep up with changes to existing malware and viruses. If you don’t have any anti-virus software on your computer, GET IT!

Back-up Your Computer Files

Running backups can be one of the best safety nets if your computer becomes infected by ransomware. With the latest Petya virus, it reboots your computer and begins encrypting your files. If you have backed-up your files already, you can shut down your computer in the middle of this process. You can then reconfigure your hard-drive, reboot and restore back-ups.

Avoid Keeping Investment Documents on Your Computer

To make sure your investments are secure, you should not store sensitive files in open files on your computer. You can encrypt them yourself, but that does not always guarantee they will be secure against a ransomware attack. The best safety measure would be to store investment documents in hard-copy somewhere and immediately remove them from your computer.

Investor Resources

For more information on how to protect your investments against ransomware attacks, contact our team. Check out this USA Today article for more information on the Petya virus.

]]> <![CDATA[Bad Actors: Tips for Spotting the Financial Industry’s Bad Apples]]> https://www.savagelaw.us/blog/bad-actors/ https://www.savagelaw.us/blog/bad-actors/ Fri, 09 Jun 2017 20:33:47 GMT We’ve all seen bad actors in movies and T.V., but did you know that bad actors can be found on Wall Street and other financial industry institutions? The Financial Industry Regulatory Authority (FINRA) recently released a statement outlining the need for checks-and-balances against bad actors. What are bad actors? FINRA defines a bad actor as…

]]> We’ve all seen bad actors in movies and T.V., but did you know that bad actors can be found on Wall Street and other financial industry institutions? The Financial Industry Regulatory Authority (FINRA) recently released a statement outlining the need for checks-and-balances against bad actors.

What are bad actors?

FINRA defines a bad actor as one within the financial industry “who seeks to evade regulatory requirements and harm investors for their own personal gain”. Essentially, they’re con artists; fraudsters. I’m sure you’re familiar with that old adage about a few bad apples, right? Well, that’s exactly what Financial industry regulators have to say about bad actors. In his statement, FINRA President & CEO, Robert Cook spoke about the danger that bad actors pose to the overall stability in the industry as a whole. Bad actors have the capacity to ruin investor confidence in their broker-dealer and mar the reputation of the entire industry through their actions.

Spotting the bad apples

If you’re involved in the financial industry as an investor, it’s important to be able to spot bad actors. FINRA has comprehensive preventative measures in place to seed-out bad apples but every once in a while, some are bound to slip through the cracks. Here’s some things you should know before doing any business with a new broker-dealer.

License & Registration

No matter what security you’re investing in, make sure your broker-dealer is properly licensed and registered. This means they must be not only a licensed broker, but licensed to do the specific function they are offering to you. The broker must also registered with a licensed brokerage firm.

Account Monitoring

It is especially import to review your monthly account statements. Even if you are a passive investor who prefers to let your broker-dealer make investments as they see fit, you need to monitor your account activity and statements. Watch out for any unusual investments involving large sums, or irregular movement and contact your broker-dealer if you see anything unusual.

Aggressive Solicitation Practices

Aggressive or unwarranted solicitation of services or information should be an immediate red-flag. If you have been receiving repeated calls, emails or requests for correspondence from an individual claiming to be a broker-dealer associated with your account, you need to verify they’re identity.

Investor Resources

FINRA offers comprehensive investor support and resources. Click here if you want to learn more about filing a complaint or other services Contact our investment loss recovery attorneys if you believe you or a family member has been affected by bad actors.

]]> <![CDATA[Top 8 Investor Complaints]]> https://www.savagelaw.us/blog/top-8-investor-complaints/ https://www.savagelaw.us/blog/top-8-investor-complaints/ Fri, 21 Apr 2017 14:00:27 GMT The investment world is pretty cut-and-dry; either you win, or you lose. Not much can be said for losing, after all, it’s part of the game. Usually when you lose out on an investment, it’s due to the fact that you didn’t account for certain risks. However, there are some instances beyond investors’ control that…

]]> The investment world is pretty cut-and-dry; either you win, or you lose. Not much can be said for losing, after all, it’s part of the game. Usually when you lose out on an investment, it’s due to the fact that you didn’t account for certain risks. However, there are some instances beyond investors’ control that might derail an otherwise sound investment. These instances give rise to understandable investor complaints. Investor complaints pertain to how a transaction was executed. Whether it’s against a broker, investment advisor, transfer agent, or an entire brokerage firm, investor complaints focus on how an investment transaction is handled. Below are the most frequently recurring investor complaints as reported by the SEC’s Office of Investor Education and Advocacy (OIEA).

Top 8 Investor Complaints

  • Order placement, execution and order confirmations
    • This may be three-in-one but essentially, this top complaint refers to how a transaction is handled
  • Delivery of funds/securities
    • Can you imagine closing on an investment and never getting your end of the deal? Well that’s exactly where these investor complaints come from.
  • Dividends
    • This could pertain to dividends being over-promised or an investor might never see their dividend
  • Fees & Commissions
    • One of the most popular investor complaints; unearned commissions on transactions, misrepresented fees, hidden fees
  • Inaccurate/Misleading Financial Disclosures
    • Whether it’s done intentionally or not, false financial disclosures contribute to some of the most frequent complaints
  • Margins
  • Excessive Trading
    • Unnecessary or non-requested trading
  • Account Management
    • This pertains to all aspects of an investor’s account management and handling by a firm/broker, including: opening accounts, closing accounts, transferring accounts, and transferring and redeeming mutual funds.

Complaint Resolution

There are several measures that can be taken to resolve investor complaints.

  • Investors can contact the OIEA with complaints. The OIEA then forwards them to the firm or entity from where the complaint originated.
  • Investors can contact the SEC for potential action to be taken if foul-play or fraud is suspected
  • Contact Savage Villoch Law to find out your investment-loss recovery options
]]> <![CDATA[What to Know About Shortened Securities Transaction Settlement Cycles]]> https://www.savagelaw.us/blog/transaction-settlement-cycles/ https://www.savagelaw.us/blog/transaction-settlement-cycles/ Mon, 03 Apr 2017 19:20:13 GMT Last week, the Securities and Exchange Commission (SEC) amended standing rules regarding broker-dealer securities transaction settlement cycles. The new rules shorten the amount of time between when an investment transaction is placed and when it is actually processed. Previously, the transaction settlement cycle was set as “T+3”. This refers to the time, in days, that…

]]> Last week, the Securities and Exchange Commission (SEC) amended standing rules regarding broker-dealer securities transaction settlement cycles. The new rules shorten the amount of time between when an investment transaction is placed and when it is actually processed. Previously, the transaction settlement cycle was set as “T+3”. This refers to the time, in days, that lapse before a transaction is settled. For instance, if you buy or sell a security on Monday, Thursday would be the day the transaction is settled. The SEC has set the new settlement cycle to “T+2”, meaning only two days bass between transaction and settlement. This change is set to take effect for all transactions on or following September 5, 2017. We’ll cover what securities investors need to know about the shortened transaction settlement times and how you can learn more about it.

What Does a Shortened Securities Transaction Settlement Cycle Mean?

The most obvious impact is that securities transactions will now be processed quicker. Investors need to be aware of this change, as it affects the amount of time they have to prepare for a transaction. Investors need to:

  • Prepare and deliver securities certificates to broker-dealers one day earlier
  • Be ready to pay for a transaction one day earlier

You will need to discuss with your broker-dealer exactly how your transaction will be affected, going forward.

What Transaction Settlement Cycles Are Affected?

This change applies to many common forms of securities investments, including:

  • Stocks
  • Bonds
  • Municipal Securities
  • Exchange-Traded Funds
  • Some Mutual Funds
Investor Resources

For more details on how the shortened settlement transaction cycles will affect securities investing, check out the SEC’s order approving the new settlement cycle. If you have questions about how you can keep your investments protected, contact us today. Check out our full blog for even more up-to-date legal news and info!

]]> <![CDATA[What Investors Should Know About Customer Advisory Centers]]> https://www.savagelaw.us/blog/customer-advisory-centers/ https://www.savagelaw.us/blog/customer-advisory-centers/ Fri, 03 Mar 2017 15:00:06 GMT Customer Advisory Centers vs. Call Centers Although they sound similar, customer advisory centers differ from call centers in several important ways. Securities firms and investment broker-dealers typically rely on call centers to handle basic customer service issues and administrative functions. They do not provide investment or trading advice, nor do they earn commissions on trades…

]]> Customer Advisory Centers vs. Call Centers

Although they sound similar, customer advisory centers differ from call centers in several important ways. Securities firms and investment broker-dealers typically rely on call centers to handle basic customer service issues and administrative functions. They do not provide investment or trading advice, nor do they earn commissions on trades and deals. Customer advisory centers, meanwhile, are call centers staffed by securities professionals. They are able to provide trade and investment advice as well as sell securities services. A customer advisory center is typically designated to clients with:

  • Portfolios under $100-250,000
  • No current assigned broker-dealer

What Investors Need to Know

Customer advisory centers can be a useful resource for securities firms and investors alike. Securities firms can refer casual investors to a center that can handle general investment questions and services while focusing dedicated broker-dealers and advisors on more diversified or high-level investors. Alternatively, they can help investors facilitate transactions and order services without meeting with advisors. Despite the benefits, customer advisory centers do pose certain risks that investor should know about. Customer advisory centers are generally set-up to offer center brokers incentives for selling certain securities and brokerage services. This may give way to practices that may not be within investors’ best interest. Investors should be wary of:

  • Aggressive sales tactics promoting certain products and services
  • Attempts to gather irrelevant customer information
  • The promotion of “no fee” or “no cost” goods and services
  • Information that is misrepresented or omitted in advice or contracts
  • Failure to disclose complete cost brackets for goods and services

Investor Resources

For more information on customer advisory centers, check out this FINRA advisory bulletin. If you believe you have received misrepresented information or inaccurate investment advice from a customer advisory center that has resulted in improper fees or investment loss, contact Savage Villoch Law, PLLC to find out potential recovery options.

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