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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Monday, May 01, 2006

Financial Advice

When deciding to invest in some sort of security, remember: Buyer Beware. If someone is selling a hot tip on a stock or trying to get your portfolio under their command always think about the other person's agenda. It sounds simple, but when investors have little or no knowledge about something they will more often be persuaded into investing in something. The consumer lacks knowledge and the seller has all the knowledge and the seller throws out some impressive statistics about a stock, but you may not know exactly what those stats mean.

You can get that feeling going to an expert in any field. Let's say you need a mechanic and you go to one and they tell you the fuel line is messed up. Well you have no idea what the fuel pump looks like, does or how much it will cost to fix. You get a funny feeling, but you have no way to confirm that the mechanic is telling you the truth. Lawyers are similar. Very few people have legal knowledge to know what to do in a specific legal situation. But you have to put a lot of trust in your lawyer that they are looking out for what is best for you. In any field there will be you crooks and angels.

The difference with investing is that you can teach yourself the basics and that will help you in the long run so you do need little to no investing advice. If you get a funny feeling, do not go forward with an investment. Do not do it because you are afraid to raise questions. It is your money and investment advisors are often looking out for themselves, not you.

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