Today I want to pose a question and give you some food for thought. Why do you think it is best to be your own investment advisor?
First I want to say that I am not advocating that you should not have investment advisors. Many can be helpful when it comes to helping you achieve your financial goals. What I do want to advocate is being knowledgeable enough to be your own best investment advisor.
Sometimes it is a good thing not to listen to other people’s opinions. When it comes to money everyone has an opinion. Have you heard these before?
- I just made a 50% return this year on one stock! You should buy it too.
- Investing in real estate is the best. Even in a down economy you still have renter’s paying down the mortgage.
- Mutual Funds are the best. You just put your money in and don’t worry about them.
- I max out my 401k because I heard that people can retire early when they do that.
- My financial planner put all my finances together for me. Now I don’t have anything to worry about. You should visit them too!
- X package/product is great because it allows you to do Y with great results!
What is the problem with all these statements? To me, they all sound like a statement from someone who doesn’t know what the *&!# they are talking about. 😉
This is the #1 reason to be your own best investment advisor. It’s your money and it’s up to you and only you to take care of it! Are you going to blame the person who gave you financial advice or are you going to blame your own ignorance when your financial situation goes sour?
How can you be your own best investment advisor?
- Don’t be that guy (or gal). What I mean is don’t be the one spewing useless financial drivel to people you hang out with. People will either not listen to you because they know better, or will listen to you and potentially make some stupid financial mistakes and want to blame you. Or they just won’t care either way, in which case, it’s best not to say anything at all.
- Educate yourself. If you hear a financial word like “no-load” mutual fund and don’t know what it means, find out! If you care about your money at all you will take the time to educate yourself.
- Learn the lingo. No, not the Tango. Although that would be fun! Learn financial lingo. That way you know what people are referring to when they talk or when you read something on the web.
- Understand the uses of different financial instruments. Money is a tool. The things you use to manage money are tools. The things you use to invest money are tools. They are all tools. You can’t understand how to be a carpenter if you don’t know how to use a hammer, a measuring tape, and a chalk line. The same goes for your finances. You won’t get the full use out of a financial tool unless you really know how to use it. Stop using a hammer on a screw when you really need a screwdriver.
- Trust your gut. Once you have an understanding of money you will usually be able to tell whether something is a good deal or not. This statement always seems to hold true when it comes to finances. “If it sounds too good to be true, it probably is!”
- Get a second or tenth opinion. Wait, you just said don’t listen to other people’s opinions. Well if you heard that you aren’t understanding what I am writing. Don’t be a fool. There are plenty of people that are way smarter than you when it comes to money. Your job is to listen to the intelligent ones and it is your job to NOT listen to the stupid ones. Once you learn more about finance & money you should be able to distinguish between the two. Multiple opinions will help you discover the best course of action even more.
- It’s your responsibility. YOUR money is YOUR responsibility. Act that way. Don’t give over full control to an investment advisor that charges out the wazoo. Be active in managing your own finances.
Well I hope that gets you down the right path to improving your finances. If I haven’t hit a chord yet I promise that you won’t be disappointed by the end of the week. 😉
Check back tomorrow for another exciting post about personal finance and the economy. So what are you waiting for? Subscribe to my RSS feed by reader or by email so you don’t miss a thing!