Investing advice these days comes from many different sources. Some popular ones come from media, insurance firms, stockbrokers, magazines and investment advisor representatives. Let’s examine a few.
TV investing advice
There are several popular shows on TV constantly giving advice. While many of them are very entertaining, can you really take their advice to the bank? In fact, it’s in their interest to continue to give evolving advice so that you would continue to tune in to their shows. In fact, they are given a pass by law in the 1940s act that created investment advisors. Advisors governed by this act must work in your sole interest and disclose any conflicts of interest.
Can’t miss investing advice.
There are legions of companies trying to assert that they have the right one investment for you. At least that their one investment should be included in your portfolio. The prospectus tells you that their past results cannot be counted on to create future returns. It simply considered unwise to let all of your financial fortunes ride on one investment.
Insurance investing advice.
Some people believe that permanent insurance is the answer. First, all permanent insurance policies are not alike. Often those that guarantee returns do so at higher costs for aspects of administration in order to back those claims. These guarantees are generally based upon low investment returns and therefore require you to invest large sums of money in order to be able to leverage them for income in the future.
Stockbrokers and taxes.
Many investors nor their stockbrokers consider the effect of taxes. I once spoke to stockbroker that said that tax was the job of the CPA and not his. His was making money for the client. Waiting a few days to execute a trade may be the difference between a 38% tax rate and a 15% tax rate. If you are like me, I would rather have 85 cents than 62 cents on the dollar.
Magazine investing advice.
I’ve always enjoyed the magazines near the checkout counter that say “what to invest in now”. The now usually means what you should have done in hindsight.
Investing advice with your best interest in mind
When an investment fiduciary is managing other people’s money the Center for Fiduciary Studies (fi360) says they should consider the following asset allocation variables:
- Time Horizon
- Risk Tolerance
- Expected Return
- Asset Class Preference
- Tax Status
These variables will should also be considered in light of a financial plan for the goal the money being invested to achieve. I have seen too many cases where someone invest for one purpose without consideration of their other needs that might require a different investment target risk and return. If you do not have the time to invest in creating a financial plan or consider these variables, you may wish to consider the services of an investment advisor representative. This person is legally bound to work in your best interest and not the interest of their company.
While all investment advisor representatives don’t have the exact same investing philosophy, our end goal has your best interest in our mind.
(1) The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. (2) Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. (3) The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: AZ, IN, IL, MI.