Decide if its suitable
Go over these questions with your advisor until you fully understand the answer to each one. Your advisor should be able to explain, in plain language, why a particular investment is suitable or unsuitable for you. If they can’t, then look for a second opinion from another qualified professional. Keep going until you find someone you can understand completely.
Is this investment suitable for me?
A suitable investment is one that’s appropriate to your risk tolerance and investment goals when considered in terms of your life circumstances, investment experience, and overall portfolio. If your advisor recommends that you sell current assets to buy a new one, ask how this will benefit you. Will you earn a higher dividend? Does it have greater potential for future profits? If not, the transaction may only benefit the advisor by generating commissions that you will have to pay. Make sure your advisor can explain to you why the new investment is better for your portfolio.
How does this investment work and how will it make money?
Different investments make money in different ways. Whatever investment type you consider, find out what the investment does, how it will make money, who the principals are, their background, and their track record. See our section About Investments for a full description of different investment types.
What are the risks?
Every investment has risk. Risk relates to the possibility that you could lose some or all of the money you invested. It’s critical that you understand what risks an investment carries, what would trigger those risks, and the chances of those events occurring. Make sure you’re comfortable with the risks and that you can afford the losses if the risks do occur. If you borrow money to buy investments, you could lose even more than your original investment outlay.
Does this investment come with a guarantee?
Some investment products, such as principal protected notes (PPNs) 
, offer a promise to pay. This is essentially a guarantee. But a guarantee is only as good as the credit worthiness of the guarantor, so it’s important to find out who provides it, what it covers, and on what terms. A product guaranteed by the government or a chartered bank is very different from a purported guarantee from an unknown company or an individual involved in selling the investment. Con artists use the promise of guaranteed high returns to attract investors, so we encourage investors to think carefully about all investments with a guarantee feature. Even with a known guarantor, take the time to ask questions about what it covers and whether the terms will apply to you if you ever need to use it.
How much will it cost me?
Make sure you understand how all the fees and deferred sales charges work. Ask your advisor to show you how much you might make on the investment in a number of different scenarios, including a worst-case scenario. A range won’t give you certainty about your returns, but considering the range can help you decide if the potential return is acceptable in light of the total fees you will pay.
Are there better alternatives?
Ask your advisor if they have considered any other investments that might be suitable for you. There may be other investments that would equally support your financial goals, but they may cost less or be less risky. If so, then the recommended investment might not be the most suitable.