Wikipedia of Finance - Wiki-Financepedia - Financial e-learning tutorial courses on Investing Wikipedia Chapter - Legal Matters before Investing

What are the Legal Matters you Should Know Before you Start Investing


Before you make any decision on your financial investment plan, Lot of other parameters need to be clarified and evaluated. To “check Legal Matters before Investing is one of the key parameter” when you start your building your investment plan.

You can make use of return on investment calculator to plan your target goal. It is really important to keep check of investment related legal matters. New comers are easier target for fraud companies. Let us understand various other evaluations to be considered before investing.

Check Legal Matters before Investing

Here we are going to learn about actions or checks to be performed on legal matters before investing. This is a cruical stage for any investment or for any investor. Investment legal matters are the one which should be done before investing. Let us check out, what are the information required to be checked on the ground of legal matters before investing.

Legal Documents of offer

Before you take any action, It is highly recommendable to ask legal offer documents. Investment consultant or sales representative primary objective is to close the deal by clarifying and explaining points of your interest keep aside rest of the offer.

This are trained professionals do achieve their targets so be careful. There may be other terms and conditions attach to the offer which can be distraction from your prospect.

A few individuals do gather related data but show there negligence to understand lines. There are possibilities that unattractive terms and conditions may be written in small letters at some corners. So it is always insisted investment documents are subjected to market clause, Read the document carefully before signing or investing.

Legal Authority Verification

Now a day’s it’s very simple to make anyone fool by selling investment schemes by emails or phones who’s company never exists or company doesn’t hold any legal rights of selling investment products. Learn about legal formalities to register a company.

If you are new to the product, It is always recommendable to contact financial consultant or advocate to verify legal authority of the company selling investment schemes. Following things on legal matters before investing needs to be verified:

1. Act or law under which license or permission is granted to the company.

2. Verify the details of head office mentioned in the schemes. Try to visit or make a phone call to make sure that there is an existence of the company.

3. Check the company establishment date and get details of previous reputed clients from the company. Make a vist or call to clients to cross verify the reputation of the company.

4. In India, any ventures or any schemes needs prior government approval. Approved ventures or schemes mention their registration numbers on the documents.

5. Companies Act, Companies Website, ISO Certification, Companies email ids or phone numbers, testimonials, etc does not guarantee the legal authority of the schemes.

6. Whenever and whatever investments plan you intend to start, always have the habit of making payment via cross cheques. Never ever intend to pay by cash even though you have verified legal authority of the company, schemes, etc.

Consider Other Legal Matters

Apart from the above considerations, it is also advice to consider below points under legal matters before Investing:

1. Cost of investment analysis should be done thoroughly. Some schemes charges are not mentioned clearly and they may carry hidden charges as well. It is your primary duty to get the final net cost of investment from representative before making any payments.

2. Assessment of risk should be carried out based on companies reputation, companies past performance before investing.

3. Get clarified with representative or financial consultant about scheme liquidity which means in case you are in need of cash then how quickly your investment can be converted into cash.

4. Before finalising any investment scheme compare the various similar deals offered by other companies. You may get any other better option for investment as well.

5. Always make a deal with authorized and reputed broker companies. For example: In India, best mutual funds can be sold by AMFI Certified brokers as well.

6. In internet world, Knowledge is limitless. Perform some research about your scheme on the internet and check reviews written by investors or experts before making any financial conclusion.

7. It is highly recommendable that any schemes or any stocks you intend to buy should be under regulatory roof with regulatory guidelines which will address you in your grievances. For example: In India, SEBI (Securities Exchange Board of India) is the legal regulatory board to protect investor’s concern.


Evaluation does not stop after verifying schemes or companies or legal documents. There are some evaluations need to be considered as a part of financial planning. Let us understand in next tutorial chapter.

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