Are You A Target?
by Michael Thorman
Used with permission from the Canadian Adventist Messenger

“Psst... Are you interested in a great investment opportunity?” Have you ever been approached like this? Many church members hear comments like this from fellow church members or friends. There is often an implication that it’s a “sure-fire deal,” a once-in-a-lifetime opportunity, the chance to “get in at the ground level.” Typically, such ventures have a high failure rate. Many persons who have placed their savings in these businesses have lost substantial sums of money, seriously impacting their lifestyle or retirement plans.

In any close-knit group, there is the potential for affinity fraud. This can occur when you are approached by a fellow member to become an investor. You should be suspicious if asked to trust them just because they are affiliated with the church. Exercise the same caution as you would if you were dealing with anyone else. Unfortunately, there are unscrupulous promoters, even church employees or fellow mem-bers, who prey on those who let down their guard.

Of course, you will come across legitimate investment opportunities. In order to help you evaluate them and increase your potential for success, here are a few basic concepts for your consideration.

• Higher potential return means higher risk – This principle is just as immutable as the law of gravity. Expecting unrealistic profits on your investment is a prescription for trouble.

• If it sounds too good to be true, it probably is! – A successful investor will always exercise healthy skep-ticism. Ask plenty of questions, and make sure the answers you get make sense.

• Take your time – Don’t be rushed into investing your money. There will always be opportunities in the future.

• Diversify – Don’t put all your eggs in one basket! Your life savings or retirement fund should be held in a variety of investments to minimize the impact of inevitable ups and downs in their market value.

• Only invest in risky investments what you can afford to lose – If you have decided to get involved in a speculative venture, don’t invest more than you can afford to walk away from if the worst happens.

• Educate yourself – It’s important to understand the basics of any company or business in which you put your hard-earned dollars. It will help you evaluate the information you receive about your investment. Learning the basics of how to read a financial statement will be time well spent!

• Seek counsel from an independent third party – Speak with a knowledgeable person who is not involved with the investment to help you evaluate the proposal.