Every since I started on my journey in dividend investing and trying to learn what I can, to develop a strategy that works for me to attain my financial goal, I have come across a myriad of financial advice. But which ones should I heed? Which ones will help me reach my financial goal? As with any aspect of life you will always find people that will want to tell you what to do…usually for their own benefit.
That’s not to say that there aren’t people that can actually help you. I always wondered about those that tend to hawk specific stocks and funds. I always ask “What’s in it for them? Are they just being altruistic?” General advice should be such that it makes you think and analyse about what they are advising. Not to just blindly follow without question. As an example I see many posts and comments regarding specific stocks. If you followed each one then at some point in time, in the very near future, you’d run out of investment funds. But be very wary of anyone telling you that a certain stock is a sure thing. The only way I can explain it is to relate a story from my past experience in my first ever foray into stock trading.
This goes back to over 10 years ago and my wife was working in a casino. At the gaming table she was working at was a young guy playing. During the course of the game he began to talk about stocks and things with his job as a broker. One of the things he brought up was that there was a stock coming out that was a “Sure thing.” He mentioned that stocks name during the conversation and my wife made a note of it because he was super confident that the stock price would sky rocket. He told a few people at the gaming table that they’d be foolish not to invest in the stock.
My wife came home and told me about it and we discussed about investing in that stock. We scraped up the money (yes, we were not overloaded with cash) to invest and I opened a Charles Schwab account in order to buy the stock. I don’t remember the exact details except that in the end, we lost all of our money. How? It seems that many people were interested in the stock and were buying it, thus driving the price up. I bought it one day and didn’t check what was going on with the price for a couple of days. I was very, very ignorant about stock trading in those days. What happened was that about a day after we invested in that stock, there was a massive sell-off of it and the price dropped down below the price that we initially paid for it.
The lesson here was to make sure that you have a basic knowledge of stock trading and the nuances involved. After the fact, we felt that we were scammed. We were used, as many others were, to beef up the price and then when it hit a certain price or timeframe, the stock was dumped and someone made a handsome profit. Again, this is just conjecture of ours at the time but we stayed away from stock trading for a while.
That is, I stayed away until I learned the basics and developed a solid strategy for my investing activity. And this blog is not to give advice as it is to detail what I have done right investing, what I did wrong in investing, and detailing information that I found to be useful to me. I never recommend a specific stock or fund because everyone’s strategy is different. We all have different comfort levels when it comes to risk. I’m hoping that when you read me blog it will help you with your investment goals.