MoneyMerc

A ton of information exists out there about personal finance, especially investing. May I recommend the following items to keep in mind:

Be skeptical

Question what you read and hear. Trust only facts. Verify from several sources any information you come across. I wish I had invested $1000 to short every stock that a client called about and had to buy immediately despite recommendations against doing so. (Regular investors shouldn’t even be stock picking, but that’s a subject for a future post.)

Follow the money

Whenever someone suggests an investment or product to you, always follow the money. (“This particular insurance policy will not only take care of the ones you love if you pass away, but it’s a great vehicle for investing for retirement also…”) Figure out what’s in it for them, and why it actually makes sense for you. Who profits from the transaction? You’ll learn loads (no pun intended!) about the motivations of the person providing this information.

Follow your hunches

I’m not talking about hot stocks or buying and selling here! When you hear about a crazy idea regarding investing (or anything!) that sounds slightly off or too good to be true, it probably is. (“I just moved all of my 401k into emerging markets stocks because XX expert said that is the next hot sector. I’m gonna be rich and retire at 40.”) For those of you without spidey-sense, your gut reaction when analyzing matters of money is usually a pretty good start… why? Because it’s YOUR money!

Turn off CNN

OK, so most people have trouble fully checking out from market news, even if they have least bit of interest in finance. Turn it off. (For help, try Tim Ferriss’ Low Information Diet). Use the ‘follow the money’ principle above: CNN makes money when they sell news. Guess what they will do, no matter what? What you learn on CNN will not make you rich, it will make you question your strategy. Best to ignore it, and stick to your game plan.