April 24, 2015
When educating yourself on the world of investing, who should you learn from and who should you avoid? Why?
When educating yourself on the world of investing, who should you learn from and who should you avoid? Why?
You should listen to people who actually want to teach you for the sake of learning, people like Warren Buffet or John Boggle are the ones you want to listen too, they do not have a conflict of interest when dealing with you. You dont want to go to a broker to learn about investing because he will teach you all the ways he can make money off of you. You dont go to a car dealership to learn about cars so dont go to a broker to learn about investing. Always ask youself if the person telling you something benefits if you do what they tell you too, you need to keep an eye out for people with a conflict of interest who make their living off of loads and fees.
Learn from teachers. These would be people who do not have any vested interest in what you put your money in. For example, you wouldn’t ask a car salesman (or you shouldn’t!) which car to buy. You should go in knowing what you want, what you are willing to pay and what it’s worth. Obvioulsy a car salesman will be biased towards selling you on his cars. And the same will be for most financial advisors. They will often get bonuses based on what you purchase. It’s better for them than for you. If you NEED a financial advisor get a “fee only” advisor. Then they are only charged for the time they advise you and not based on what you invest your money in.
When educating yourself on the world of investing, you should learn from people who are there to teach you. People who will give you information, and then let you make investment decisions based off of what will be best for your situation. They won’t try to sell you on some certain investment or tell you what you should or shouldn’t do. They will help you learn, so that you can decide these things for yourself.
You should stay away from people who make money giving financial advice (with the exception of fee only advisors if you need them) because nine times out of ten, they will not have your best interest in mind. These people are looking to make a profit for themselves and they will not think twice about selling you on something if they can make a nice commission off of it. Be aware of who you are getting your information from; pick the teachers. Then, investigate for yourself to see if you agree with what they are telling you so you can make the best decisions for your financial life.
Wonderful comments everyone. I have nothing to add.
Learn from: Yourself! Financial freedom comes from you learning to make good choices about what you do with your money. Making good choices requires you to learn about money, risk, diversification, and compounding. Educate yourself, but always ask the question why? Learn money concepts by reading books. Know the time value of money. The resources to read would be from past individuals who have been successful and have elected to share their methods. Some would be Mr. Finley, John Boogle, Warren Buffet, Peter Lynch, and others. Look for websites like this one. There are a number of good websites.
Avoid: Generally, those who make a living from selling financial products and instruments. Not all, but many have conflicts created because of their position they are in. For example, a friend became a life insurance salesman for a major life company and quite after less than a year because he was pressured to sell certain products based on company request versus what the customer needed. Their ethics indicated something was wrong with doing so.