If you’ve just entered the world of investing, you’ve probably noticed that there are so many people who’ll want to advise you on how to achieve your financial goals. Even though most of them (probably) have good intentions, sometimes following their advice can turn out to be a real disaster. And that’s why you’ll want to be able to separate a good advice from a bad one. In order to help you do this, we compiled a list of best and worst investing advice you can get.
The worst advice
You have to diversify
One of the things you’ll be guaranteed to hear once you start investing is that you have to diversify. The theory holds that if the value of one of your investments drops, your other investments will gain value. However, this doesn’t really have to be the case and it’s a much better idea to only invest in the field you know much about. Many people believe that investing in emerging markets besides well-established businesses is a good way to protect themselves. However, a global recession can easily override their theory.
Fixed annuities are a bad investment
A fixed annuity is a type of annuity contract where you accumulate capital on a tax-deferred basis. Many people consider this to be a bad investment simply because there’s a guaranteed fixed rate of interest. Still, many people have managed to earn quite a lot of money this way and they don’t seem bothered by fixed rates. Not to mention that this type of investment can turn out to be a real lifesaver during bear markets which many investors tend to struggle quite a lot with.
Always invest in collectibles
A lot of people who invest believe that putting money in collectibles is always a good choice. While collectibles such as old coins and stamps really do hold their value, you have to know a lot about these in order to make a good investment. Otherwise, you’ll always be at risk of bidding for something that simply isn’t worth investing in. On top of that, collectibles tend to take a lot of time to increase in value and there are no real assurances that will actually happen.
The best advice
Go for mutual funds
It’s also quite common for people who are into investing to advise you to go for mutual funds. These are a perfect option for those who are just starting out and don’t want to go big. Mutual funds involve a group of small investors who pool their money together and use it to buy stocks and other securities. Investing in mutual funds is always recommended since it means you and other investors will spread the risk. Also, mutual funds tend to be quite flexible, since they allow you to move your investments from one investment asset to another.
Invest in gold
If someone tells you to invest in gold, you should definitely give it some thought. If you have some cash lying around, investing it in gold is always a good idea. Man-made currencies can easily lose their value and in today’s age of technology, your assets can get frozen in a matter seconds. On the other hand, gold is simply guaranteed to hold its value, no matter what happens in the world of politics. And if you decide to trade your gold, you can always turn to experts in Forex trading in Australia.
Come up with a good plan
This may sound a bit cliché but it definitely works. Many people will tell you that you need a good plan for your investments and they can hardly be more right. If you manage to make a comprehensive plan, you’ll know exactly what you want to achieve and how you plan to do it. And managing your investments is much easier when you know exactly what you’re aiming at and what your plans for the future are. Also, if you have a good plan, you’ll be able to manage your investments proactively.
Whether you want it or not, people are going to keep offering you’re their advice when it comes to investing. It’s up to you to learn the difference between good and bad advice and make smart choices for your portfolio.