Financial advice is like sand in the Sahara - it's everywhere. Knowing how to tell the difference between good sources of advice and bad ones can mean the difference between financial success and failure!
You should always ignore financial advice received from these sources:
You should take financial advice from the following sources with a grain of salt and research any recommended investment opportunities for yourself before participating:
- Spam emails - The people who send these out aren't interested in your financial success, only theirs.
- Chat rooms - Financial advice received here could be coming from an experienced financial advisor, a scammer, or a ten year old. How would you be able to tell the difference?
- Psychics - No explanation should be necessary.
- Anyone who has a vested interest in encouraging you to make certain specific investments, including commission-only financial planners and principals in the company being touted.
- Your brother-in-law (or other relative) - A relative might be successful financially but that doesn't mean he/she can help you be successful also.
What worked for one person in the past might not work for you since your backgrounds and financial situations are probably different.
- A golfing partner - Same situation as #1 above.
- A financial advisor who is compensated by fees and commissions - As long as there is the possibility for the advisor to earn a commission from his recommendations, there is always a possible incentive to provide biased financial advice.
- Business and investment magazines, newsletters, TV shows, and radio shows - If you peruse the popular business and investment media, you're sure to see widely opposing opinions on various investments on the same show or in the same publication. This fact alone suggests that caution and due diligence is in order.
The most reliable and trustworthy source for financial advice is an experienced (3 years or more) financial advisor with a solid track record who gets paid on a fee-only basis.
An experienced professional who can provide a substantial list of satisfied clients is very likely to be able to provide you with quality financial advice as well. But you still need to keep yourself informed so you can recognize if and when your financial advice begins to get a bit shaky.
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