We all want to put our money where our mouth is, but some investment advice can damage our financial future. While taking tips from experts and making an informed decision based on analysis and report is a good choice, listening to people with no reputation or experience in the stock market or business finances will be a mistake. If you are currently being bombarded by unsolicited advice, you need to learn which ones to listen to and which ones to ignore. Below you will find a few tips on when to stop listening.
1. Speculative Ventures
If you have limited funds and would like to double it over and over, you might be searching for high return investments. However, the truth is that the higher the potential return is the greater the risk is. Any new startup looking for investors will carry a high risk, no matter if the person starting the business has successful businesses behind them. Just because they succeeded in one industry, it doesn’t necessarily mean that they can do it again.
2. Family Business
You might also be approached by one of your family members to invest in their fund, business, or scheme. Let’s be clear. You should decline the invitation. First, you should never mix business and family. Second, you cannot assess the financial situation of the business in an unbiased way. You need to take your emotions out of your investment decision to make rational choices.
3. Hot Stock Tips
Hot stock tips are hardly exclusive to you, and the only thing hot about them is that they can burn a hole in your pocket. You should always ignore hot stock tips and focus on your long term goals, instead of getting rich quick. Remember that financial predictions are never a hundred percent reliable, and you will have a lot to lose if the trends change, and the historic, over 20 percent return plummets.
4. Advice from People with No Proven Track Report
Before you take any advice, it is important to check the success rate of the person giving it. If you trust unsuccessful people with your investment you’ll be the only one to blame when everything goes wrong. Without finding out more and checking the facts, you will risk your hard earned savings. Check out the source of the advice first, and next consider taking it. When you are searching for a DUI attorney you don’t want people who have been jailed for drink driving give you advice.
5. Anything that Looks Too Good To Be True
There are several investment schemes out there that are either illegal or unethical. If the investment seems too good to be true, it probably is. This is the best way of avoiding ponzi schemes and speculative investments that can make you say goodbye to your 401K funds.
Before you trust someone and accept their financial advice and tips, always check their reputation, credentials, and track record. Never mix family life with investments, and make sure that you don’t believe every market prediction that is presented to you.