The documents: What you must be told, and what nobody reads

Before selling you an investment, they must tell you what you are buying. In writing. It is the law.

The problem is almost never a lack of information. It is that nobody reads it.

First document: the prospectus. A company selling securities to the public must publish one, checked by the regulator.

It covers the business, the accounts, the managers, and above all the risks. Often hundreds of pages.

The regulator checks everything is there, and readable. It never says whether the investment is good.

Second document, the most useful for you: the KID, the key information document.

Three pages at most, with the same layout for every product. It must be given to you before you sign up.

It says what the product is, what it costs, how long to hold it, and what you can lose.

The most valuable part is the costs. All fees, added up, turned into a percentage per year.

In the app, this chapter is animated and narrated, card by card. Start free trial.

For the example, ten thousand euros invested for ten years at five per cent a year: sixteen thousand two hundred and eighty-nine euros.

With two per cent of fees a year, three per cent is left: thirteen thousand four hundred and thirty-nine euros.

Nearly two thousand eight hundred and fifty euros apart. These fees were written, in black and white, in the KID.

The KID also shows a risk indicator, scored from one to seven. One is the most cautious. Seven, the riskiest.

Handy for comparing at a glance. But it has its limits, and you need to know them.

It is calculated mainly from past swings. A product calm for years can hide a risk that has not yet shown itself.

And a low score does not mean zero loss. It means: losses that are less likely, or smaller.

Finally, the KID shows scenarios: unfavourable, moderate, favourable. They are simulations, not promises.

Third document: the annual report. The one a listed company publishes every year.

It is the richest of all: full accounts, debts, risks, executive pay. And almost nobody opens it.

Professionals read it starting from the end: the notes to the accounts. That is where nasty surprises hide.

The twist: the law protects you mainly by informing you. If you do not read, it cannot do much for you.

One simple reflex: before signing up for anything, ask for the KID. Read the costs, the risk indicator, the recommended holding period.

Three pages, ten minutes. It is often the best return of your whole life as a saver.