We all know there is no shortage of opinions when it comes to investment ideas and financial advice. So, it pays to dig a little deeper to test the motivations behind the message. Who can you really trust when it comes to financial advice?
A wise person once said that, “a little knowledge is a dangerous thing”. In an age of seemingly limitless access to information, this humble adage takes on a whole new level of significance, particularly when it comes to financial advice.
Everywhere you turn you can find someone with an opinion or the new ‘secret to success’. How well can you trust what you hear? If it’s your personal financial wellbeing at stake, then it pays to ensure you can trust the source.
Take excessive media hype with a large pinch of salt
While it is good to keep informed about what is going on in the world, there is no doubt that there can be a huge amount of distortion in what you see or read, because of the media's need to sensationalise and scream for attention.
It’s simply the nature of the beast. We have all seen the headlines that use hysterical terms, such as “carnage” or “free-fall” when describing a share market downturn. Investors are often accused in headlines of panicking or being spooked.
With such frenetic language being used, you could be forgiven for thinking that the end of the world was near. If we were to use this over-zealous reporting as our basis for investing then everyone would be scared into keeping their money under a bed.
The reality is that the share market will always have a degree of volatility and should only ever be used when investing with longer term time horizons.
Dramatic falls will come and go, but the long term trend is what really matters. The day to day volatility and the frenzied headlines that go with it have little relevance if share investments are used in the correct way.
Not everything on the internet can be a trusted source for financial advice
Beware of the ‘Dr Google syndrome’
A lot of people like to do their own research on financial issues and personal investment. In the internet age, a great mountain of information is now at your fingertips and the ease of access certainly gives people a great degree of independence if they want to dig into a particular subject.
While the ‘democratisation’ of information is a good thing in general, the problem is that there is no filter at all on the quality of what you find.
There are all sorts of opinions, ideas and reviews that we can readily get our hands on from the web, but a lot of it can be ill-informed hearsay or, even worse, be misleading or unscrupulous.
We all know someone who has tried to diagnose a medical issue themselves on Google (or tried it ourselves) and realised how dangerous this can be. It is no different when it comes to your financial health.
It’s important to make the distinction between unfiltered information and advice that takes your personal circumstances into account, so use the internet with discretion.
Everyone has someone in their lives full of a ‘great new idea’
Is there an ‘Uncle Fred’ in your family? You know. . . someone who has strong opinions on everything and feels compelled to give them to you? It is natural to be more trusting about family or friends who want to give us advice on money issues and they may well have good intentions, but how qualified is such advice?
In the social media age, everyone is expected to have opinion on everything, but be wary about how much credence you give to unsolicited advice from family and friends, no matter how well-meaning they may be.
It’s fantastic to get a ‘hot tip’ but always back it up by speaking to a qualified financial planner.
Three reasons why speaking to a Bridges financial planner can make a difference to your financial future
Your financial future is too important to leave to chance, so if you need advice on your financial growth and security it’s best to seek it from a Bridges financial planner, who offers:
1. Qualified advice: based on recognised accreditation, ongoing education and access to excellent research and planning resources.
2. Personalised recommendations: based on a thorough analysis of your goals, needs, desires and circumstances and not on driven by the need to sell a particular product.
3. Long term relationships: based on a commitment to provide you with ongoing advice as your needs change over time.
What’s your best tip for saving or making money?