First, let’s get one thing straight: This isn’t an “all advice sucks except for mine” type of email (sorta but not really!). I’ll be the first to admit that even my advice won’t apply to literally everyone.
But still, most financial advice (heck, advice in general) sucks.
Why? I’ll tell you.
Why most financial advice sucks
The problem with advice is simple: it’s often based on what worked for one person (the one dispensing the advice).
And, what worked for one person has a deep seeded history in their own experiences in life. Their upbringing. Their mistakes and successes.
As a result, most advice you hear is clouded in biases, assumptions, and personal experiences that won’t apply to everyone. It’s a one-size-fits-all approach when good advice is anything but that.
This is why good advice is hard to come by. Harder than you probably think.
For instance, I went to college. It’s the best decision I’ve ever made because it got my foot in the door in a high-paying career field.
But I would never advise everyone to go to college.
While I believe there is value in higher education, it’s not right for everyone. Frankly, the value of a college education is diminishing, and it’s never been easier to make a lot of money and lead a productive life without a degree.
See what I’m getting at?
The best advice you’ll get is advice seeded in objectivity, not simply what may have worked for one person.
For example, take active vs. passive investing.
I’m a passive investor. I never pick and choose my own stocks. Instead, I invest in index funds and ETFs and let them ride. I don’t time the market. In truth, I barely pay attention to my investments because, in time, they always go up.
I advise that you do the same. Not because it worked for me but because the numbers uniformly prove that passive index fund investors outperform active investors who pick and choose their stocks and day trade.
It’s been proven time and time again.
This is objective advice because it works for the large majority of people.
If anyone tells you differently, they’re either trying to sell you something or they are giving you advice based on personal bias, not objectivity.
“Dude, you should tooootally day trade! I make $30,000 a month and follow this simple strategy I learned in this course…yada yada yada...”
Here’s the truth:
The best advice is often preceded by a question, such as one of these.
- What are your goals?
- What have you tried before?
- How much time do you have?
- What was your upbringing like?
These are all questions meant to reveal context. That context should be coupled with personal experience and objective knowledge to package together a customized nugget of advice.
This is when you know you’re getting the best advice.
…not that one-size-fits-all crap you read in magazines and dispensed by content creators whose sole motivation is to sell you advice you don’t need.
Until next time,
– Steve
