How to Spot Bad Money Advice: Social Media, Financial Advisors & More
One of my favorite sources for avoiding bad money advice is Scott Pape. I like what he talks about, and what he tells us about what to do and what not to do. Of course, it's always prefaced with you needing to tread your own path, as such is his motto, and you need to research your information.
He actually counsels people financially for free as part of the hotline for people who meet the criteria. He got an email from someone who asked him this, that, and the other question. He gives his point of view.
The question was from someone who said their brother told them that they should do something because their brother heard from Facebook that this is all the rage. It was to invest in silver.
Where not to get financial advice
The first problem which he did go into was don't get your financial advice from his brother, your neighbor, the car salesman, or the checkout person at the supermarket, and you definitely don't get it off social media.
Scott gave them his two cents worth and said that basically stop getting your investment advice from people who have got no credentials, that it's all about hearsay.
Sorting through financial hype on social media
If you see something in the media, whether it's social media such as Facebook, or if it's the news, do you start to get wound up about it? Do you start to think, oh, maybe that's important information for me?
I was thinking about my own experiences with people who ask me this stuff or tell me how the greatest next thing is happening for them. Sometimes when I talk about people taking bad money advice, it's one of those sorts of people and they're into the biggest, latest thing.
They’ll specifically say they’re going to do this Bitcoin thing because they said such and such and such and somewhere because someone knows, someone who said that they thought that this was a great thing.
Okay, well, where's the evidence? Show me the reports, show me the business case, show me the business papers, how much they make, where's the evidence of the performance and the returns and all that sort of stuff.
Get evidence to back up claims
I think that's what's so irritating. No one can tell you that. So the person who told someone, and then the person who told someone else, have no evidence that backs the story that they're telling, and they will gloss over the details.
Instead, they’ll claim they might give up working because they won't need to be doing it long or they’ll make hundreds of thousands of dollars, and are going to be able to retire next year and all this sort of stuff.
Remember, anything that is supposedly that good is not going to be something that you really should bank all your money on. It's a bit like doing the lotto and hoping that you will retire next year because you win the money.
So the biggest tell of all of this is in a month or six months or a year's time, the person who is going on about all of this great stuff and how they're going to be doing all of this and they'll make so much money, starts to quieten down and then you never hear a single thing about it again.
When people make a lot of money in that sort of category, they're not going to quiet down as they make 50 grand, 100 grand, and all that sort of stuff. They're going to go on and on and on and about it to you.
So you know that when they've stopped talking that the obvious has happened, that they've now lost the money. When people lose money they don't want to tell you about it because they don't want to appear foolish, but obviously, they just learned their lesson.
I think the most significant loss I ever had was when I had my money in a put option. You can Google that if you want to know what they are. They are complicated in that I didn't know enough about them. I didn't know enough about investment.
I had to take the word of the financial advisor, and I didn't really understand what my financial advisor was doing, and should have reconsidered whether I should have been investing it there. It should not be complicated, I wouldn't think.
I'm not a financial advisor or planner or any of that sort of thing so don't take my word for it. I just thought I would share the common sense of the ridiculous with you.
Plan for the future while enjoying the present
I like to plan for my future and meet my goals, but only in balance with living for now and for the future. You can actually build the architecture around living now and building for the future at the same time because you do not want to sacrifice everything about having fun now.
All because in 10 years, 20 years, or 30 years, you're going to be able to have this amount of money to be able to do whatever you want. You shouldn't need to put things on hold every day.
How to spot bad money advice
There is a lot of good advice for saving money, but you really need to do your research and look at the facts. Following bad money advice can have lasting consequences so be sure to really look into different investments and make financial decisions very carefully.
What is the worst financial advice you’ve ever received? Share in the comments below!