WHO CAN YOU TRUST FOR STOCK ADVICE?
Let me give my answer to that question right upfront: I believe the only person you can truly trust with your finances is you. That is why it is so important to learn as much as you can about the world of finance so that you alone can make decisions and guide your money toward retirement.
Although I have been buying and selling stocks for more than 30 years, unfortunately I am not immune from making mistakes. Some of them are mistakes that can’t be avoided like buying the wrong stock or buying the right stock at the wrong time. We all make these kinds of errors and most of them I can live with. The key is to make as few of them as possible and learn from your bad choices.
But occasionally I do something uncharacteristic and well, stupid. That was the case about a year and a half ago when I let my broker talk me into buying something I wasn’t comfortable with.
As I have mentioned before, I have three stock broker accounts (two that I manage myself and one that my Dad still manages for me) and I have various amounts in each one. With my Ameriprise Financial account, there is a person who is in charge of my account and listed on every statement I get. In August 2010, I had some cash in there that I needed to put somewhere but I did NOT want to buy stocks with because I wanted to keep that money safe. Totally safe.
Knowing that interest rates were next to nothing, I called that broker on my statement and asked him what my options were, making sure to emphatically state that I wanted to take zero risk. He sympathized with me and told me what I already knew: if I wanted my money to be 100% safe then I would have to accept almost zero in return. That’s just the way it was back then and now. Treasury bills and anything insured my FDIC pay almost nothing in interest.
HOWEVER, he said, he would do a little research and give me a call back the next day. During the time I waited for him to call back, I came to terms with knowing that I would have to get almost no return for my money and I was okay with it. My mind was made up that getting very little interest was better than risking losing that particular chunk of money.
But when he called me the next day, suddenly I was a different person! He had several funds that were very safe and had performed admirably in the past. They had very little risk and they should give me a return much higher than I could get with T Bills or anything else. Did I want to consider those?
No, no I didn’t I said.
Well, he said, you really should consider them because they are a good alternative and they really do have a good track record.
What where they again? Funds? Which ones?
Once I started asking for more information I slowly, with his help, started talking myself into buying into one of those funds that just minutes ago I would never have considered. After about another 5 minutes on the phone I was giving him the okay to make the purchase for me.
I had let myself be talked into buying into a front loaded fund that I really wanted no part of and the second I hung up the phone I regretted it. But, being proud, I didn’t call back and now 16 months later I am down about 8% with that money that I wanted to invest with zero risk. This is the chart for the fund I bought into from about the time I made the purchase:
The lesson here is that only I can really know what is best for me and my investments. As I was talking to that broker, knowing full well that he wanted to make the sale so that he could get his commission, I KNEW I was making a mistake. I just knew it and yet I did it anyway. So dumb!
Stock brokers, financial planners, and anyone else who gives you advice about money will not necessarily have your best interests at heart. Yes, there may be exceptions, but day in and day out the only one you know you can trust is yourself. Learn has much as you can about the stock market, gold, silver, funds, bonds, and all the other ways you can invest your money. Doing so will help you make money decisions on your own that are in your best interests.
