What is the difference between saving and investing?  How will a decision to do one or the other affect your financial goals?

Savings are funds that you set aside for future use in a secure place, such as a bank or credit union account insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) or the National Share Insurance Fund (NCUSIF) respectively.  This is a guaranteed investment, as in a certificate of deposit, with a fixed rate of return.

When investing, you use money to purchase something with the hope of gaining a profit or income, but with no guarantee.  Stocks, bonds and mutual funds are among the many different types of investment products, or securities, available.  While you have the chance for a greater return when investing, nothing is guaranteed; you could lose all of your money.  However, investing well can help you accumulate a nest egg for retirement, buying a home, or a college education.

Sellers of stocks, bonds, mutual funds and other financial products are required to pass examinations and register in Georgia.  The Securities and Business Regulation Division of the Georgia Secretary of State's office has jurisdiction over securities dealers, salespeople, investment advisers and investment adviser representatives located in the state.  You can contact that office with most complaints about securities sales in Georgia, as well as to verify the registration status and disciplinary history of a particular salesperson or securities dealer doing business in Georgia.

In most instances, firms that trade commodities are also required to register with the Commodity Futures Trading Commission and are subject to its regulations.   Be suspicious of firms that trade commodities and are not registered, although registration in itself is no guarantee of honesty.

The securities industry is further self-regulated through the Financial Industry Regulatory Authority (FINRA), which has a listing of the different designations financial salespeople can attain. When selecting a salesperson, you can determine whether you are dealing with a registered financial services dealer by checking their web site (  Find out what designations your prospective salesperson has or look for a Certified Financial Planner (CFP) designation, which indicates he or she has undergone special training.  You can also file complaints about registered financial salespeople with FINRA.

You may receive calls or emails with investment advice or “hot” stock tips, but state and federal law prohibit unsolicited telemarketing calls with recorded messages. Be aware that these illegal solicitations may be broadcasting false and misleading information.  In addition, many securities sold over the telephone are for poorly capitalized companies for which there has been no previous public sale of stock.  Such investments are generally much riskier than investing in established companies with long-standing operating histories.

The Georgia Attorney General's Consumer Protection Division refers all matters involving securities fraud to Georgia’s Secretary of State.  You should also report a suspected interstate securities fraud operation, or fraudulent postings to an Internet message board to manipulate the stock market, to the U.S.  Securities and Exchange Commission  (SEC).  On the federal level, the SEC handles complaints involving registered and non-registered financial services sales representatives around the country and can also instruct you on filing a complaint about an international dealer.

You have many investment options, and sometimes the choices can be confusing.  Before making a decision, it is important to understand how investing works.  Education is the best way to protect yourself against unethical dealers and heavy losses.  To help you make an informed decision and know you are dealing with a firm or adviser you can trust, many useful books and web sites are available.

Questions to Ask the Investment Firm

  • What type of fees will I have to pay?  Some providers charge a flat rate, while others charge a percentage fee of your purchase.
  • What are the work history and background of the person who will be handling my account?  (You have the right to written information about the salesperson, his or her firm, and the investment itself.) 
  • What are all the risks, obligations and costs of this investment?  
  • Will recommendations be consistent with my financial needs and investment objectives?
  • Will I receive a copy of all completed account forms and agreements, as well as accurate and understandable account statements?
  • What are the terms and conditions of transactions?
  • Can I access my funds in a timely manner?  What restrictions or limitations are there on access?
  • Will I be able to discuss account problems with the branch manager or compliance department and receive prompt attention to and fair consideration of my concerns?
  • What are the standard commissions, sales charges, maintenance or service charges, transaction or redemption fees, and penalties?
  • Have you ever been disciplined by government regulators or sued by a client?

  When Dealing with a Salesperson…

  • Before sending any money, read and understand the company’s prospectus.
  • Take your time and ask questions.  As “financial advisers,” investment salespeople should explain any questions you might have.
  • Never feel obligated to invest.

Investing Online

You can purchase investment products on the Internet with little or no assistance from advisers.  If you plan on investing online, you should always:

  • Receive full disclosure, prior to opening your account, about the alternatives to buying and selling securities and how to obtain account information if you cannot access the firm’s web site.
  • Understand that you are probably not linked directly to the market, and that the click of your mouse does not instantly execute the trade.
  • Receive written information from the firm to substantiate any advertised claims concerning the ease, speed and cost of online trading.
  • Receive written information from the firm about significant web site outages, delays and other interruptions to securities trading and account access.
  • Obtain information before trading about entering and canceling orders (market, limit and stop-loss), and the details and risks of margin accounts (borrowing to buy stocks).
  • Determine whether you are receiving delayed or real-time stock quotes and when your account information was last updated.
  • Review the firm’s privacy and web site security policies and whether your name may be used for mailing lists or other promotional activities by the firm or any other party.
  • Receive clear information about sales commissions, fees, and conditions that apply to any advertised discount on commissions.
  • Know how to contact a customer service representative with your concerns, if necessary, and request prompt attention and fair consideration.  Is there a toll-free number, or must you call long-distance?

Signs that May Indicate Illegal Activity

  • A “ground-floor, once-in-a-lifetime opportunity”
  • A claim that no risk is involved
  • A claim of skyrocketing prices for commodities such as gemstones, rare coins or precious metals; the offer of a questionable “certificate of authentication”
  • A guarantee of large or immediate profits
  • Pressure to act now because “the market is moving”
  • Recommendations from a broker based on “inside” or “confidential” information
  • An excessive number of transactions in your account or errors in record-keeping
  • Unauthorized trades or adjustments to your account
  • Excessive pressure to change trading strategies
  • A claim that an investment is fully insured, unless it is a product ensured by the FDIC, such as a bank account or certificate of deposit (note: $100,000 limitation).

How to Protect Yourself from Scams

  • Do not invest unless you can afford to lose what you invest.
  • If it sounds too good to be true, it probably is. No legitimate promoter ever will claim to offer a risk-free investment.  Commodities or securities investments are basically a form of speculation or risk-taking.  Solicitations that claim there is little or no risk are a dangerous "red flag."
  • Verify that the brokerage dealer is registered with the Secretary of State.  Be aware that not even all registered dealers are honest ones.
  • Make sure the dealer’s address and phone number match the company for which he claims to work.
  • Never give money to a messenger who comes to your home following up on a phone sale.  Never write the salesperson’s own name on a check as the payee; use the dealer’s name.
  • Ask the firm to send a prospectus or other literature about the firm.   Do not be swayed, however, by the glossy brochures con artists produce.  Also, ask for a written proposal describing conditions of the contract and a form outlining the risks involved with the investment.
  • Ask a phone solicitor to explain the investment to your lawyer or accountant.  Even if you do not have an attorney or accountant, the salesperson’s response might be a tip-off to his real identity.  A legitimate salesperson will have no objections, while a con artist may plead lack of time and brush you off.
  • Arrange a meeting at the dealer’s office; it is never a good idea to do business with a faceless person over the phone.   Ask a third party to attend.