Want to know how NOT to handle your finances?
I attended a party yesterday, and when I told people that one of the things I do in my business is teach people how to invest and manage their money I suddenly became the most popular person in the room. It seemed as though the most common remark was either “I let my broker handle everything” or “I got this hot tip on, and bought into (fill in the company name here). What do you think?”. I was amazed at how little effort and attention some people pay to what happens to their money. Of course it’s fine to have a broker who handles the day-to-day management of your finances, and to even listen to suggestions from others, but ultimately you need to do some research and follow-up to ensure your money is being handles properly.
Without getting into the whole fee-based vs. commission-based broker discussion (which I will do at another time), it is simply not a good idea to entrust your hard-earned earnings, retirement savings, and possibly your family’s future entirely to another person whose primary concern isn’t necessarily your own. You should always have some input as to how your money is invested and you should certainly make sure that your broker understands 110% what your level of risk tolerance is as well as what future events you might be planning so as to ensure that you are diversified accordingly.
Similarly, should you should ever receive a tip about a stock, or any other vehicle for investing your money (a new business, investment trust, etc.) you should always take the proper steps and do your due diligence before handing over your money. This is especially true when discovering these “tips” on internet message boards or blogs since there is a long history of scams and pump-and-dump schemes associated with these resources. Sometimes such reccomendations come from a trusted source like family, friends, or co-workers, but that is not to say that even they did any research before passing this “advice” along to you.
The best thing you can do in any situation involving money decisions is to be as informed as possible, and always check up on your investments. Never be afraid to ask questions, and if you have any reservations whatsoever about an investment vehicle be sure to even voice those concerns, and even object to having your money used in ways in which you are uncomfortable with.
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