No one is an expert on everything so it only makes sense that we seek advice on topics that we don’t feel are our specialty or topics that we believe are too important to guess about. And one of the topics that is most dear to many consumers is money.
Not everyone feels qualified to make investments on their own, make important financial decisions or even create a personal financial plan or budget without some input from a more knowledgeable resource.
But sometimes it can be difficult to know who is knowledgeable and who to trust for financial information and as a result many consumers resort to searching for money advice online.
And even though there can be some great pointers and information online, there is also a lot of misinformation and useless junk that can also be found online. Here are a few tips to know what you should ignore when researching money advice online.
Who Is Not A Good Or Reliable Resource
In most cases, you want to seek advice from a person whom you wish to emulate. With that being said, you are not going to want to see financial advice from someone who is broke. If a person has not been able to grow their money, invest it well or even to save it then they are not the person that you want to listen to when planning for your financial future. Also be very weary of anyone who suggests that you go into debt to finance a potential big payday in the future. Even if that person has invested and made money, there is no guarantee that you will also make money. First, anyone who tells you any different is lying, and second you are risking the loss of your borrowed money as well as whatever it is costing you to borrow the money. Never risk going further into debt to make money. Think of investing as you would a garden, you need the seeds to be able to grow the garden and you need the seed money to be able to grow your portfolio. It is also very risky to take the advice of a financial advisor who is not a fiduciary. A fiduciary is legally and ethically bound to work in your best interest. In a nutshell it means that the person is bound to work in the best interests of his or her client when managing assets. This person can have nothing to gain from any investment made on your behalf.
Other Bad Choices
There are times when you will hear some advice and think that it sounds too good to be true. That is when you need to trust your own judgement and believe that it is in fact too good to be true. There must be some hidden information or a hidden agenda that you are not aware of and that will not work in your favor. This also covers the information that might come to you in the form of a “hot tip”. These are usually nothing more than rumors that were overheard and are most likely being taken out of context. The advice will be worth what you paid for it or could even end up costing you a lot of money. It is also not going to end well for you if you decide to follow advice that is obviously biased. In other words, if you take advice from someone’s relative about what a great financial advisor they are, then you might not be getting the full story. Listening to advice is different than taking advice. When you listen you are getting information, then it is your responsibility to complete your due diligence and verify or check out the information that you heard. After that process is completed then you can take the advice and actually act on it.
Rule To Live By
Internet financial sites are full of plans, outlines and downright schemes that are all professed to be the best path to financial freedom. But in most cases they are just one person’s opinion or story and they won’t really apply to or work for the general public. One of these ideas is that you need to create strict budget and live or die with it if you want to dig yourself out of debt. Now there is a shred of truth hidden somewhere in the information but that is about it. You can get out of debt with a good budget and plan but most people will never survive on a super strict budget long enough to accomplish their goal. You need a budget that you can live with and make work long term to be successful. Another popular concept is that credit cards are the root of all financial failures. Credit cards are inanimate objects and can do nothing on their own. Most financial issues are the result of poor judgement. Credit cards might have been a contributing factor but they didn’t create you debt, you did. And there are times when a credit card can be a good financial tool, when used responsibly. And finally, there is no magic number for creating the perfect nest egg for retirement. Some sites say 10% while others say 15% or more. But there are too many variables to ever have a single figure that will work for everyone or even the next 10 people who visit the website. Your age, income and where you plan to live during your retirement all have a huge impact on how much you need to save each month and a flat rate does not take any of that information into account.
General Housing Advice
For past generations, it was believed that you should buy a home and work diligently to pay it off. That was your savings plan for retirement and where you would live out your golden years. But much has changed in the last 50-60 years. People are living longer and outliving their ability to care for themselves and a house. And some people are even outliving their savings. A house is a good investment in some cases but again, each person’s situation is unique and a house is not the answer for everyone. Along those line, the old concept that a home equity loan is the way to get out of debt is no longer true. Home values are not always on the rise now and along with your debt you are now risking your home if you can’t make the payments on your HELOC. In the end, it is perfectly ok to read money advice online but be sure to research the concepts before you act on any of the information.