Protecting your money

No-one likes losing money. The good news is, you don't have to lock your money away to protect it.

• Have enough insurance
• Make a will
• Choose the right investments
• Watch out for scams

Understand some common risks, take a few precautions and know what to do if things go wrong.

The bottom line
• Be prepared. You’ll find it easier to protect yourself when things go wrong if you make a plan, do a budget and get the savings habit.

• Do your homework and shop around before investing your money. Say no to scams – and report them when you find them, to protect other people.

Have enough insurance

Insurance can cover you, your family and the things you own if something goes wrong.
It pays to shop around. Compare premiums, excesses and details of exactly what is covered in the policy and what you have to do to make a claim.

Be careful not to take shortcuts when you get insurance. Read everything you can about your policies before you sign the contracts. It’s as important to make sure you have enough cover as it is to get a good price. You can lose a lot of money if you find your insurance doesn’t cover what you thought it did.

Make a will

It’s a good idea to think about what you want to happen to your money after you die. The time you take now to sort out your plans and make a will could really help the people you love after you’ve gone.

A will is a legal document that sets out your wishes for how your money and assets are to be divided up after your death. It can also cover other matters such as who should take care of your children.

Choose the right investments

An investment may be perfectly legal and above board but you may still lose money if you buy something that does not suit your needs.

For example, you might be tempted to buy some shares in a company that is doing well but if your goal is to save for a holiday next year, a high interest savings account might be a better choice. If the shares fall in price before you need to sell them to fund your holiday, you could lose money. Investing in shares can give good returns over the long-term but can risk losing money in the short-term.

Do your homework, have a plan and shop around when choosing investments.

Watch out for scams

Some so-called investment opportunities are nothing of the sort. They are scams, confidence tricks designed to cheat you out of your money.

Scammers have fooled people into parting with a lot of money over the years. Even people who thought they knew a lot about money and business have been tricked.
New versions of old scams pop up all the time. Extravagant promises can be mixed with high-pressure selling techniques and sophisticated looking brochures or internet sites.

Scammers try all sorts of ways to get your attention. You might get a glossy leaflet in your letter box, you might get an email, you might even get a phone call at home. A salesperson might knock on your door, you might see an intriguing advertisement in the paper or you might get a tip from a friend.

Typical claims include:

• “Congratulations! You have won first prize in our lottery. Send us the $50 processing fee as fast as you can so we can send you your reward.”

• “You’re going to make 10% a month with this investment! We’ve had a great response and there aren’t many shares left. Call this number today. You’ll kick yourself if you miss out!”

• “Owing to a computer error, we need to reconfirm customer information. Click here to visit our website and update your account details.”

• “This seminar is reserved exclusively for top drawer investors like you. For only $5,000 you will learn in just one weekend the investment secrets the finance experts try to keep to themselves.”

The best way to protect your money is to stop and think. Resist the pressure to sign up quickly. Throw the leaflet in the bin, hang up on the call, turn the salesperson away from your door. Don’t respond to suspect emails and never click on the links they may contain.

Sorting scams from real investments

You can save yourself a lot of trouble by taking the time to check out the scammer’s claims. There are three clues that can warn you that the offer you’re looking at could be a scam:
• It may promise much larger returns than other investments.
• It may suggest that you can avoid tax or hide money from the authorities.
• It may promise secret, insider knowledge of the market that can only be shared with special people – like you!

Report and complain

If you hear of something you think is a scam, report it. If you think you’ve been ripped off, complain.

The sooner you act, the more chance there is that the scammers will be caught.

Unfortunately, there is no guarantee that the authorities will be able to get your money back if you have been a victim. The best protection is to say no and not get sucked in by the scammers.