Questions to ask before you invest

Last updated: 4 November 2026

Ask the right questions before you invest to understand the risks, costs and whether an investment is right for you. 

1. Do I understand how the investment works? 

Make sure you know what you’re investing in and how it's expected to make money. 

Why it matters 
If you don't understand where the returns come from, it can be harder to recognise the risks or know when something doesn't stack up. 

What to do 

• Find out what you're actually investing in and how your return is generated. 
• Read the Product Disclosure Statement (PDS) or other offer documents. These can explain the investment's features, fees and risks.  
• If you can't explain simply how the investment works and how you could make or lose money, pause before investing. 

Find out more: Learn more about shares, managed funds and ETFs, property, investments paying interest and complex investment products.   

2. Does it fit my goals and timeframe? 

Start with what you want your money to achieve and when you'll need it. 

Why it matters 
Different investments come with different levels of risk and recommended minimum investment timeframes. Your financial goals, investing timeframe and tolerance for risk can help you work out what's appropriate for you.  

What to do 

• Write down what you're investing for and when you expect to need the money. 
• Consider whether you might need access to your money quickly, even if its value has fallen at that time. 
• Check the Target Market Determination (TMD) document for the investment, to compare the investment's risks and suggested timeframe with your own. 

Find out more: Understand different types of investment risks and how to think about your risk tolerance.

3. How much could I lose? 

Don't just focus on how much you might make. Ask what could happen if things don't go to plan.  

Why it matters 
The potential to earn more usually comes with a greater risk of loss, and taking more risk doesn't guarantee a higher return. If you borrow to invest, you may also increase your personal risk of loss.      

What to do 

• Find out what risks the investment is exposed to that could cause a fall in value.  
• Check whether the investment uses leverage (borrowings). 
• Consider the worst-case outcome and whether you could afford the loss. 
• Be particularly careful if the risks aren't clear or the investment is being promoted mainly on its potential returns. 

Find out more: Learn more about complex investment products, plus borrowing to invest. 

4. How and when can I get my money back? 

Check how easily you can sell or withdraw your investment, how long it may take and what it could cost. 

Why it matters 

Some investments are easier to sell than others. You may have to wait before you can withdraw your money, pay an exit fee or accept a lower price to sell quickly. In some cases, there may not be a buyer when you want to sell. 

What to do 

• Check how you can sell or withdraw your investment, how long it usually takes, and whether restrictions, notice periods or withdrawal limits apply. 
• Check how the sale price is worked out and whether you may have to accept less than the investment’s stated value. 
• Look for exit fees and other selling or withdrawal costs. 
• Have other money available for emergencies, so you are not forced to sell at a bad time. 

Find out more: Learn about liquidity risk and why some investments can be difficult to sell. 

 5. What could it cost me? 

Fees, other costs and tax can reduce the net return you receive from an investment. 

Why it matters 

An investment can look attractive based on its advertised return (which may be based on the previous return or expected return) but that doesn't tell you what you'll end up with. You may pay fees and other costs to buy, hold or sell an investment. You may also need to pay tax on investment income or a capital gain when you sell.  

What to do 

• Check all the costs of buying, holding and selling the investment. 
• Compare investments based on the return you could receive after fees and costs, not just the advertised return. 
• Understand the basic tax implications before you invest. Your tax outcome will depend on the investment and your circumstances.  
• Keep records of what you paid, investment income and relevant expenses. You'll need these for your tax return and to work out capital gains or losses. 

Find out more: Check the ATO resources on tax implications for your investments and assets, plus what records you need to keep.

6. How does it fit with my other investments? 

Consider how the investment fits with what you already own, rather than considering it on its own. 

Why it matters 

Spreading your money across different types of investments can reduce the impact if one investment, company or market performs poorly. But buying another investment doesn't necessarily make you more diversified if it gives you more exposure to things you already own.  

What to do 

• Look at what you already own, including investments you hold through managed funds, ETFs and your superannuation account. 
• Check whether the new investment gives you exposure to something different or adds more of what you already have. 
• Think about whether your overall mix of investments still suits your goals and the level of risk you're comfortable with. 

Find out more: Learn more about diversification and the different ways that you can diversify your investments. 

 7. Is this investment the real deal?  

Before you invest, take time to check who you're dealing with and whether the investment is legitimate. 

Why it matters 
Investment scams can be difficult to spot. Scammers can impersonate legitimate businesses and use professional-looking websites, advertising, celebrities, social media and fake or AI-generated content to make an investment appear genuine. Anyone can be targeted. 

What to do 

• Use ASIC’s Professional Register Search to independently check who you're dealing with and any relevant licences or registrations. 
• Check Moneysmart’s Investor Alert List of suspicious companies, businesses and websites. 
• Check websites and contact details independently. Don't assume a professional-looking website or information you've been sent is genuine. Learn how to spot a scam website.  
• Be cautious about fake or AI-generated content, including investment promotions that appear to feature well-known people. See how an AI investment scam can work. 

Find out more: Learn how to check on a company or person and how to protect yourself from investment scams. 

8. Am I relying on facts or the sales pitch? 

Finally, step back from the hype and make sure you feel confident about what you're investing in and the risks involved. 

Why it matters 
An investment can be legitimate and still be a poor investment for you. Hype, sales tactics and attention on social media or in the news can make an investment seem more attractive than it really is. Taking time to check the facts can help you make a more informed decision. 

What to do 

• Check claims about potential returns, risks and benefits rather than relying on promotional material. 
• Don't let pressure, hype or fear of missing out rush your decision. 
• Read the disclosure or offer documents yourself and make sure you understand how the investment works and what could go wrong. 
• Be especially cautious if you're considering an investment simply because it's being promoted by finfluencers, or trending on social media or in the news.  

Find out more: Learn about href="/investment-warnings" title="Investment warnings">common investment warnings and what to look out for before you invest.