Daily Archives: April 14, 2015

The Good, the Bad, and the Ugly of Investment Advice

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There are plenty of resources out there offering investment advice. Not all of this advice is good. Some of it is bad. Some of it done right ugly. So to separate the wheat from the chafe, we’ve listed a number of resources here that you’ll find on the internet, in the library, or advertised on TV.

Good: Books

There are many good books you can read. I recommend that you start with “The Only Investment Guide You’ll Ever Need” by Andrew Tobias. It is a general book covering most topics related to investing and frugal living. If you are looking for details that are easy to digest, this is the book for you. He makes several recommendations for further reading at the end of the book, but this is a good book to start with.

Good: Non-Credit Investment Courses

While some of these depend on the quality of the teacher, in general they are great resources for learning the basics of investments. Look for “continuing education” or similar titles on the website of your local community college or university. Many times your teacher may be a professor or teacher hired by the university. Sometimes the person teaching the course may be an investment advisor or broker themselves. If your teacher is soliciting services things could go bad. If that is the case, then keep that in mind. Take the information for what it is worth, and then shop around for the services your need from someone else to gauge the legitimacy of information you gathered.

Bad: Radio and TV commercials and call-in shows

Most radio programs, commercials, and call-in shows are selling something. A larger segment of the program will be about the host’s favorite investment product. The hosts (and sometimes the guests) are selling investment portfolios, insurance plans, and newsletters (see below). There can be a lot of good advice on the non-pitch portions of the program, and especially when they interview industry experts. Beware of buzz-words and claims of “exponential” or “unlimited” wealth (imagine the exclamation marks if it were in print).

Bad: Investment Newsletters

Investment newsletters used to be mailed to your home. Nowadays they are subscription based emails that you may or may not be charged for. The problem with newsletters is that they are telling you about opportunities that the authors have probably already taken advantage of. This is pretty common with newsletters about FOREX trading, Day Trading, and Penny Stocks. While there may be some newsletters that are interesting reads, relying on the information for investment is just bad.

Ugly: Your family member or friend’s plan that will “make us all rich”

At some time in our lives’ we’ve all had that one relative or friend that claims to have the one opportunity that will “change your life forever” or “make us all rich beyond our dreams.” Avoid this type of advice at all costs. You only want to invest in things that you know and real wealth comes from diligence and hard work, not quick schemes.

Ugly: Wealth Building Programs

Like newsletters, seminars, classes or anything else claiming AMAZING returns are cause for pause. Wealth building programs usually are a combination of the previous. Attend a seminar, setup numerous consultations, buy the books, listen to the tapes, buy the DVDs, and bring your friends. Think of this as a combination of the two bad choices above combined with the one ugly one right before this. Many of these programs will claims to teach you to “master the game,” as if your money is something to play with.  Cult like following of a charismatic leader may be part of this. Many times often than not their advice is not the soundest, and if it is sound it may not be the best advice for you. You don’t need a social movement, just sound, independent advice. Beware of the hustle.

Before investing, make an educated decision. Consult qualified advisors that can help guide you through the process or read up enough to make a confident choice. Remember, if it sounds too good to be true, it probably is.

 

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