Crowdfunding

This is a non-profit way of non-government groups and individuals to raise money to help victims of natural calamities, to complete a project or to help individuals with serious medical condition. After the planning of the fundraising is set, the project is advertised and marketed to search for sponsors, potential backers and investors. Before you make a contribution, make sure to do your own research first. Here is a list of things you have to know:

  • Cause, company or artist – do a background check and confirm if all the information they give out is true. Look for negative issues or anything shady about the company, are there complaints or fraud issues with their state attorney general?
  • Campaign – there are two types of campaign; “all or nothing” and “flexible funding”. An all or nothing campaign is when the creator only gets the pledged money even if the goal amount is reached. In flexible funding, the creator will get all the funding even if the goal amount is not reached.
  • Payment – does the company or website immediately ask or charge payment in your credit card even if the deadline is still far?
  • Additional fees – are there additional fees charged to your credit card?
  • Rewards – what will you get in return for your investment? Will there be rewards or rebates? Does it differ depending on the amount you invested?
  • Ownership control – will you have certain control in the project once you invest?
  • Refunds – will get a refund if the goal is not met or completed? If so, how will you get your refund?

Things About Pyramid Scheme

Also known as the Ponzi scheme and is considered an illegal form of a multilevel marketing. In this scheme, your profit will depend on the number of referrals you made or the number of people you encouraged to join not by the amount of products you sold. Sometimes, these schemes does not even have real products. This is common with investment and independent direct selling opportunities.

Here are a few things you can do to avoid being a victim:

Be cautious of presented opportunities to you, especially if it sounds suspicious. If you need to invite or bring in more investors to make your profit bigger, you better think twice before joining.

You can verify a company’s legitimacy with Better Business Bureau, your local state Attorney General or other licensing agencies.

Be doubtful when you hear success stories or testimonies regarding the company.

For victims of pyramid scheme, complaints can be filed with the state consumer protection office, state Attorney General, or the Better Business Bureau. If the scheme or fraud involves sureties, complaints can be filed at the state’s securities administrator or the Securities and Exchange Commission.

Savings Bond

If you are planning to invest and are looking for the safest way to do it, you can invest in U.S. savings bonds. It is the only investment scheme endorsed by the federal government therefore, it is considered risk free.

If you want to learn more about savings bonds, treasury bonds, and securities including the process of buying and redeeming investments, things to do in case the owner dies, etc.; you can visit TeasuryDirect. This site contains all needed information like savings options which includes EE/E, HH/H and I savings bond.

You can use the following in determining the value of your savings bonds: Savings Bond Calculator, Savings Bond Wizard, and Redemption Tables.

What You Have To Consider Before Investing

Think of the reason why you are investing such as, for retirement, for college funds or for purchasing new assets such as a house or a car. Regardless of your goal, investing is one of the best decisions to make to help you to be successful. Before you make a final decision, consider these questions:

  • How fast will you be able to get your money back? Shares, bonds, stocks can be sold anytime in mutual bonds but there is no assurance that you will be able to get your full money back. However, there are investments like limited partnership, IRA’s, or certificate of deposits does not allow withdrawal of shares.
  • What is the guarantee of return from your investment? Earnings in the stock market is not constant, stocks can go up and down. There is no guarantee that your earnings will be the same every time.
  • What type of earnings to expect? There are different types of earnings such as interests, dividends, or a rise in value if you invested in the stock market.
  • How much risk is involved? Investment is like a gamble, there are risks involved. Sometimes, you will not be able to get what was promised. Even if the U.S. government backs S. Treasury securities, this does not guarantees protection from fraud or loss.
  • Are your investments distributed? Investments prices tend to go up and down, that is why you should divide your money to different investments to save you from losing all of it at once.
  • Are there tax advantages? There are certain investments that have tax advantages such as the savings bond which are exempted from local and state taxes. If your investment is for something important such as retirement or college, there is a possibility that you will be exempt from paying income tax.

For useful tips regarding investments, you can visit the site of Securities and Exchange Commission which is Investor.gov.

For questions, you can contact the SEC’s Office of Investor Education and Advocacy

You can consult the Financial Industry Regulatory Authority for help preparing to invest.

Treasury Securities

These are debts issued by the Bureau of Fiscal Services. If you purchase a treasury security, the government is like borrowing money from you but they will pay you back in full amount once the security matures.

  • Treasury Bills – usually matures between a few days up to 52 weeks
  • Treasury Notes – usually matures between one to ten years
  • Treasury Bonds – a 30 her term that incurs interest every 6 months until maturity
  • Treasury Inflation-Protected Securities – the principle values change based on inflation, usually with a fix interest rates depending on the maturity.
  • Savings Bonds – fixed interest rate over a period of time
  • Floating Rate Notes – interest rates vary

Here are ways to purchase a treasury security: