Financial Advice to Avoid
There is no shortage of financial advice out there, from TV and radio talk shows to unsolicited emails. Of course, not all financial advice is valuable, and some could cost you big time. Knowing what financial advice to ignore is just as important as knowing what advice to take.
So, where should you not look for your financial advice:
- Unsolicited emails – Spam emails offering financial advice, or touting a stock as the “next big thing”, should ALWAYS be ignored, no matter how attractive the pitch. Spam emails are a prime source of the “pump and dump” scam, in which penny stocks are manipulated in an attempt to lure unwary investors. After the scam artist has made their money, the stock is dumped, leaving those unwary investors with a ton of worthless stock.
- Internet chat rooms – chat rooms are a notoriously bad place to get investment advice. It is impossible to verify the identity of people in chat rooms, and that friendly person posing as an investment guru could well be a scam artist with a vested interest in the stock he is touting.
- The locker room, office, restaurant, etc. – In essence, these places are all brick and mortar versions of the chat room, and the hot stock tip you overhear could be damaging to your financial health.
- Those with a vested interest in the stock they are touting. This includes commission based financial planners, employees or officers of the company or anyone else whose financial position would be improved if you bought the stock.
- Relatives – It can be tempting to take the advice of relatives, especially if they are successful investors. However, just because a particular investment was suitable for a relative does not make it right for you. Everyone has different needs and goals when it comes to saving and investing.
- TV and radio talk shows, investment magazines, etc. – The advertisers and guests on these media outlets often have undisclosed financial interests in the investments they promote, and this can cloud their judgment, and lead you astray.
Finding reliable investment advice is never easy, but knowing which advice to avoid can help you steer clear of unsuitable investments.