Business News: Who Not To Listen To

June 28, 2007 By Matthew Paulson

There’s a lot of good financial advice on personal finance blogs, in financial magazines, in the business section of major newspapers across North America, on the web, and on TV, but there’s just as much bad advice as there is good advice. People push bad financial products because they have a financial incentive to do so, others try to create headlines where none exist, and some people just talk about things that they really aren’t qualified to discuss in a professional publication. Here are some ways that you can tell you’re reading financial advice that should be treated as highly suspect.

Hype Without Evidence – A lot of people pushing bad investments and unproven financial systems will try to push their program by saying how much money you can make by doing what they supposedly did without showing any real evidence. Anyone can claim they’ve millions in the market, but proof is what matters.

Revealing Secrets of The Rich – Anyone who claims to be offering you the secrets of the rich, or some fantastic new system that will make you a ton of money should more than likely not be listened to. There are no secrets of the rich just lots of hard work, persistence, and commonsense financial advice that very few people actually follow. If whatever information they’re offering you actually worked, they would be using to get rich, not sharing it with you.

Claims of Great Stock Picks and Mutual Funds – You’ll often see 10 hot stocks or mutual funds to buy this year articles in all of the major financial magazines. They shouldn’t ever be listened to, the best investments change each and every year. Authors who claim to have researched thousands of stocks or mutual funds and found the best ones for you have done very little research on each of the funds. Others write these articles with a clear conflict of interest because they have something to gain by writing them. Do your own research as to what to invest in, don’t buy something because you saw it in a magazine.

Get Rich In Your Spare Time – If anyone’s talking about a system in which they can claim that you make a ton of money in a short period of time with minimal experience or work, just stop listening. Making real money requires hard work and persistence, no matter how you put it.

Irrational Guarantees – If someone claims that you’ll make a bunch of money and guarantees it to happen even though there’s no possible way that the guarantee could be kept, usually the person is talking out of their, well, you know. There’s never a guarantee with any investment, something could always happen, don’t let them fool you into thinking that there is. There’s always some risk in investments, and that’s okay, as long as we admit the risk is there.

Extremely Unconventional Frugality – If someone tells you to try to save money by doing some extremely irrational things, say eating nothing but beans and rice period, you probably shouldn’t be listening to them. If you can’t imagine anyone realistically following the advice, you probably shouldn’t bother reading it.

There are a lot of telltale signs of bad financial writing. Most of the time it’s pretty clear when you read it. If your gut tells you something’s fishy, there’s probably a reason for it.