There is a wealth of information about investing and finances out there. How do you know what to trust? Who is offering sound advice, and who is trying to pull the wool over your eyes to make a few bucks for themselves? While it can be difficult to separate the sound from the bogus advice, there are a few things you can do to educate yourself.
The first thing to recognize is that there is no such thing as truly unbiased investment information. All people and organizations have biases, and these will affect the information and advice they give, even if they advertise that they provide unbiased investment information. The solution is to educate yourself about investment basics, how to recognize what the biases are, and then evaluate them.
Different types of investment and financial organizations have different biases. Some lean toward protecting consumers and take a more conservative approach, while others are out to make money quickly by taking more risks. One source of investment information is the U.S. Government, which has a consumer resource website. Composed of information from different regulatory agencies, the site has a lot of information geared toward educating consumers about financial planning, investing, financial services, and how to protect oneself from fraud. While it is tempting to see this as unbiased investment information, it is important to remember that some regulatory agencies can be viewed as a revolving door between the financial industry and government.
Investment banks and brokers are another source of information about finances and investments. So are Certified Financial Planners (CFP) who often work independently. It is important to remember that these professionals and organizations are for-profit institutions or businesses that work on commission. In theory, they make money if you, the investor, makes money. The idea is that through their expertise in financial markets and knowledge of diverse investment opportunities financial advisors will give investment advice that will lead you, the investor, to profit.
These professionals can provide excellent financial advice and help you develop a strategy for achieving your personal financial goals. While their advice might be profitable, it is important to remember that it is probably not unbiased investment information. This is especially true if a financial planner or institution is linked to an investment in some way. In this case, it is in their best interest, but not necessarily the consumer’s, to advertise the investment opportunity as a good one. This information is not always disclosed to the consumer, so it is important to ask questions.