Who advises you on money? CNN, Fox Business, or MSNBC? Do you have an accountant or financial advisor? Do you do what your friends are doing? Everyone needs help with money. We all need the right help. When you are getting a source of financial help you need to vet your source in two ways.
First, what is their angle for helping you? MSNBC, Fox Business, and the rest don’t have your best financial interest in mind. They want people to watch so they can sell advertising. So the old saying, “if it bleeds, it leads” works in the financial world too. A lot of stockbrokers and personal financial advisors are in it for their money. The advice is free, and then they make commissions from what you invest in. They want the biggest commission off of you as possible. Look at the other person’s angle when helping you and know what they have to gain, then use common sense to use that advise or not.
Second, what is their competency? Do your beer-drinking buddies from high school really know anything about money or investing? Look at their financial statues, and that is not what they have, but the bottom line. Most Americans look rich because they have lots of stuff. The way to know if anyone is doing well with money is to ask what would happen if they lost their job tomorrow? (Hint: this is how you know if you are doing well also). If the person would freak out and start having to sell stuff, lose their house, or just go bankrupt, they aren’t the one you want to talk to. If they say I don’t know, I have savings for a while or I might just retire, then you know they are financially sound.
And that should be your financial goal. Have enough savings and investments to be able to stop working. So model your financial life after those that could retire today if they wanted to.
Here are a couple people I listen to for financial advice:
Next week I’ll talk about dollar cost averaging and how you can use it without fear or the stock market.
Stay Safe,
Ben