Check before you invest

What to check before investing your money

Page reading time: 4 minutes

Before you invest your money, research and check basic facts about what you are investing in and who with.

Use this information below to help you:

STOP

Don’t rely on testimonials, celebrity endorsements or a professional-looking website.
Never feel pressured to invest. Take your time to research first.
Don’t believe ‘guaranteed’ returns or claims that your investment is ‘safe’.

CHECK

Is the company licensed by ASIC to advise on or offer this investment?
How does the investment work – could you explain it to someone else?

PROTECT

Know what to do if something does go wrong, and how you can complain.

STOP: Don't rush and be alert to signs of an investment scam

Scammers are skilled at tricking you out of your money. It is not always easy to tell the difference between a real investment and a fake one. Be suspicious of anyone promising you easy money, guaranteed returns or an offer that seems too good to be true.

For tips on what to look for, see investment scams.

Beware of imposter scams

Scammers impersonate real companies and financial investment firms, using publicly available details. Always independently verify who you are dealing with:

check the AFS licence and company details through AFCA's list of financial firms, open-source searches and on the legitimate company website
call the number on AFCA's list or the company's legitimate website to ensure you are dealing with the real company and a real employee
be wary of fake offer documents sent by email, or fake websites/social media/employees impersonating the company

For more tips on what to look for, see investment scams.

Search the investor alert list

ASIC’s investor alert list is a list of suspicious companies, businesses and websites that are not to be trusted. They may be unlicensed or impersonating a real company or licensee. Search the investor alert list before making a decision to invest.

CHECK: that the company or person is licensed or authorised

A company or finance professional must hold an Australian Financial Services (AFS) licence to issue or sell investments in Australia. Or they must be an authorised representative of an AFS licence holder.

An AFS licence:

controls what kinds of financial products they can sell
shows the business meets basic standards such as compliance, insurance and training
gives better protection to investors if things go wrong (see step 4)

Holding an AFS licence does not mean that ASIC endorses the company, financial product, or advice. Or that you can’t incur a loss from dealing with them.

How to check on a company or person

If they say they are:	Check this:
Licensed by ASIC (AFS licence)	ASIC's Professional Registers Search enter the name, Australian Business Number, Australian Company Number or licence number select Register: Australian financial services licensee in drop-down menu ASIC Connect search within: Banned and Disqualified see if they have been banned from giving financial advice or managing a company Moneysmart Investor Alert List If it's on the list, don't take the risk
An authorised representative for a licensee (with an AFS licence)	ASIC's Professional Registers Search enter name, Australian Business Number, Australian Company Number, or licence number
A financial adviser who can advise you on, or sell you, an investment	Financial Advisers Register enter name, adviser number, or Australian Business Number check what they are authorised to advise on
Offering an investment in a registered managed investment scheme	ASIC's Professional Registers Search enter name, registration number or licence number

Subscribe to ASIC's free Company Alert service for updates on a company. You'll get an email to tell you when they've lodged forms, and which ones. You’ll also be notified of notices if the company is placed in any type of external administration, or if the details of their external administrators cease or change.

CHECK: that you understand how the investment works

Make sure you understand how the investment works. A good way to test this is to see if you can easily explain the investment to someone else.

Ensure you know, and are comfortable with, how much risk you are taking on. Generally, the higher the projected return, the higher the risk involved.

For more tips on how to research an investment, see how to invest.

Find and read the offer documents

Depending on the investment, an offer document may be a product disclosure statement (PDS) or a prospectus.

Before you invest, get the PDS or prospectus from:

the public website for the company
your financial adviser
searching ASIC’s Offer Notice Board

Learn more about how to read a prospectus (under 'Initial public offerings').

Be wary of high-risk or unregulated investments

Investments not regulated by ASIC include crypto or digital assets that are not financial products, direct investment in real estate or precious metals, and international investments not offered by licensed Australian providers.

Many of these investments are higher risk, so you may be more likely to lose your money. And you are not protected if things go wrong.

To find out more about high-risk investments, see investment warnings.

PROTECT: Know your rights if things go wrong

If you have a problem with a financial service or product from a licensed company or individual, you can complain. They are obligated to see if they can resolve the issue.

For detailed steps, see how to complain.

If you invest in something that is unlicensed and unregulated in Australia, it's harder to get help if things go wrong. If you think you have been scammed, act fast and follow these steps.

Anyone can be scammed - Australians lose billions each year. But keeping up to date on what to look out for can help reduce your risk. Visit Scamwatch for more information.