Hot Investment Tips by E-mail!

The following article was contributed by Ottawa-based financial planner Rick Sutherland, CLU, CFP, FDS, R.F.P.

Are hot stock tips bombarding you by e-mail? If you’ve ever surfed the Internet looking up investment related topics you may have unknowingly given your email address to one of many Internet scam fraudsters, or should I say spam companies. They claim to be legitimate firms providing a valuable service to the investing public.

In 2005 the Canadian Government’s Task Force on Spam estimated that there are more that 100 million investment-related emails sent every week. With all this good investment advice so freely given out we should all be millionaires.

Its seems nowadays about 80% of e-mails received are junk mail, not that its illegal to send e-mails. However, a lot of the hot stock tip e-mails are outside the regulated industry. When it comes to investments, stock information comes in many forms whether it is from advisors, newspaper articles, Internet surfing, friends and relatives and yes, through e-mails.

Most, if not all, “hot stock tips” we receive in our e-mails are unsolicited. It’s very enticing when you receive a personalized e-mail promising high returns and very low risk, but you must buy now. But how can we decipher between a good and bad tip? Usually it’s only after money has been lost.

The Ontario Securities Commission (OSC), the Investment Dealers Association (IDA) and many brokerage firms have set up educational programs for the public, clients and advisors to help identify the difference between legitimate advice and spam e-mails. Visit the OSC web site at www.osc.gov.on.ca for more information about how to recognize and protect yourself against investment scams and frauds.

Before you decide to “jump on board” with one of these “hot stock tips”, do your homework. Search the company and look for any regulatory filings. Talk to your stockbroker to get their opinion. The advisor will review your goals and assist you in making a decision on whether this investment fits your risk profile. Their role is to look after your best interests. At this point you may still proceed and buy the stock, but if your advisor had cautioned you against this move you will be on your own if the investment turns out to be a flop.

A lot of these “get-rich-quick” scam e-mails, are sent by people who are just under the radar of the criminal authorities for fraud, theft or forgery. In the end these spam e-mails will always be around and it’s “buyer beware.”

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of FundEX Investments Inc. with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.