Investment advise can either be good or bad. We are surrounded by many “financial advisors” from relatives, friends, social media and many other places. While some of this advice may be good, some pieces of advice are just hot air or without any value. Do you have investment advice that after analysis you discovered was empty talk? Today in this article, we will share more information on some myths and investment advice that you should not follow.
What makes investment advice good or bad?
Bad investment advice is usually due to these three reasons.
- An advisor that will repeatedly place their self-interest before that of the client
- Advisor’s lack of knowledge and failure to perform due diligence before making recommendations.
- Lack of personal research by the investors
Examples of misleading investment advise
| Misleading Investment Advise | Factual Advise | |
| Timing | You should buy and sell often | Good investments take time to bring rewards and require patience |
| Amount of money required | Investing is only for the rich | There is always an investment option regardless of your income |
| Age | You are too young or too old | Starting early is a good idea, because your money has more time to grow. But it is never too late to start investing. |
| Risks | This investment has little to no risk | All investing involves some level of risk |
| Trust | “You can trust me because we belong to the same church, social group etc” | Don’t take anyone’s advice as gospel true always research |
| Retirement | Shift to bond-based funds as you approach retirement | Invest for the long term, even in retirement |
| Funds Management | Choose actively managed funds | Choose a fund management style that works for you |
| Debt | Avoid all debt at all costs | Not all debts are bad. If a debt’s interest rate is less than the returns you are generating with that debt, you actually end up benefitting from that debt |
| Instincts | Follow your instincts | Following your instinct in many cases can help you, but in reality, market, trends and financial expertise carries the day |
| Co–sign a loan | It is okay to co–sign a loan | The stress of someone you love potentially leaving you with the burden of paying back the loan wouldn’t be worth it |
| Student Loan | Student loans are bad | Not all student loans are bad, if well utilized it unlocks lots of impossibilities and helps you achieve your dreams |
| Saving | Save, save, save | Save then Invest |
| Women and Money | Women are impulsive when it comes to money | A study by Fidelity Investments revealed that women not only save 0.4% more than men, but their investments also earn more annually by the same amount |
How to Avoid Bad Money Advice
- Consider the source, analyse, research and seek second opinions
- Think about how practical the advice is to you as a person – Money advice is like clothing. It is designed to fit a person, but that person might not be you. Certain money best practices do not work for everyone’s situation.
- Be careful about investment advises that promise near-instant success.
In conclusion, always vet any advise that you receive to ascertain its truthfulness
