Should You Take Investment Advice from People You Know?

Should You Take Investment Advice from People You Know?It always seems as though someone you know has a friend who got rich off an investment opportunity. Or what about the guy at the office who is always talking about how well his portfolio is doing? When you look at your own investments, it might be tempting to get advice from the people you know to try and boost your returns a bit. Before you believe what your sister-in-law says about the next big thing, though, it’s a good idea to step back and decide whether it’s always a good idea to take investment advice from people you know.

What Do They Know?

First of all, it makes sense to find out what they actually know. Where is the information coming from? Is your friend or relative offering information based on careful study? Does he or she have experience with investing, either as a professional or an advanced amateur? Or is the information coming from a friend, or a “business associate”?

If someone you know is getting their advice from someone else, and then passing it on to you, it’s a good idea to be wary. This is one of the ways investment scams are perpetrated. Your friend may not know that this is a scam, and if you follow along, you could get caught up in it.

Be skeptical if your ordinary acquaintance suddenly claims an “inside track” or if your friend claims to be getting information from some other source. Vet the source of information, and do your own research. It’s rarely a good idea to rely entirely on the claims of a friend or relative.

Will the Advice Really Work in Your Situation?

Another consideration is the fact that finances and investing are very personal. Just because a certain strategy works for someone you know, it doesn’t mean that it will work for you. There are a number of considerations at play. Consider whether or not you have the same long-term and short-term investing and financial goals, as well as whether or not you have a similar risk profile.

The reality is that the strategy that your uncle is using right now during retirement isn’t like to be the strategy you should be using while you are in your working years and in the portfolio building phase. Additionally, your co-worker might have a higher financial risk tolerance than you. If he or she can afford to lose some money, a risky investment might work. But if you can’t afford to lose that money, it makes sense to stay away.

Rather than taking investment advice based on someone else’s financial plan, and what works for them, it’s usually a better idea to visit with a Registered Investment Advisor or a fee-only financial planner who can help you identify a course of action more likely to work for your circumstances. A third-party is usually a better help than someone you know, and whose judgment might be clouded.

Watch Out for Luck and the Market

In some cases, it’s tempting to take advice from someone you know because they have seen some success in the market, or claim to be doing well. Before you get too carried away with someone else’s portfolio, think about the circumstances surrounding the situation. Did the person just get lucky? Or is the portfolio up because the market as a whole is up?

We like to attribute our successes to our own abilities, but the reality is that there are often other forces at play, and the reality is that in many cases, it’s just luck, or the general direction of the market. If you have a good investment strategy, there’s usually not a good reason to change things up, just because someone else claims they are doing really well for the moment. In most cases, a long-term strategy that is based on the overall returns of the market over time is one that is likely to be sufficient. Don’t become so blinded by an acquaintance’s claimed genius that you give up on a solid investment plan.

In general, it’s usually better to trust to your own research, and seek the help of an investment professional if you want advice. Too often, the reality is that people you know are in the same boat as you.

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Several Ways to Lead a Non-Profit Organization

Everyone wants to do something good with their lives, like give to charity, or work for a non-profit organization. There are many opportunities in the non-profit sector, such as charitable organizations, shelters, churches, and even some schools. Being a leader of a non-profit organization can be very difficult. Knowing how to handle the finances and what charities to support is a very difficult decision for some people. Since there are so many people who need help in the world, non-profits are starting to pop up everywhere, and you could end up leading one. Learn how below.

Volunteers and Community Advocates

Several Ways to Lead a Non Profit Organization

Many people start as volunteers or community-advocates at an entry-level position when they start working with non-profit organizations. If you work hard and continue to do good for others, you can move up in ranks pretty fast. Leading others to do well is a great way to lead a non-profit business.

Entrepreneurial Non-profit Business

Starting your own non-profit business, such as feeding the poor or Groceries for Grannies, is one way to be a leader in your community and your non-profit organization. Learning to manage the company is a big step, though, and it requires extensive training to not mess things up when filing for your tax exemption forms. Being in a non-profit leadership field can help you to good things for those that can’t do for themselves. Starting your own non-profit business is rewarding and feeds your soul.

Non-profit Scientific Study

If you are interested in curing illnesses in children, you can become a leader in a non-profit scientific lab that is working on cures for cancer. This will help the community and little kids who don’t deserve to suffer. A non-profit medicine lab is a great way to give your knowledge and ability in science to the world of medicine.

If you have a medical degree, you can work with Doctor’s without Boarders and travel all over leading other countries into a healthier country. This could prevent diseases from spreading, which makes the world at large a better place. Non-profit organizations like these are a great way to also get some training in leadership and helping others. Many doctors will intern at a free clinic on their off time to help out the sick and depraved that can’t afford health insurance.

Non-profit leaders are not in this career field for the money or the recognition. They are in it for the smiles on people’s faces when they help them feel better, get new clothes or shoes for winter, or save themselves and their children from an abusive home life. Great leaders in the non-profit business that are in it for the sake of helping others usually take a lower salary than expected so they can give more back to the community. That is what working for a non-profit is all about.

 Leadership in a Church

Leadership in a church is one way to work in a non-profit business environment. Churches are always needing someone to help with the youth, the ministry, soup kitchens, and clothing banks. These are all areas of non-profit organizations that could use a leader. Having a degree in community and human service or bringing something to the company like fundraisers and such is a way to show leadership and responsibility for the welfare of others. This will help you to advance to those few positions that are available at the top-level management positions in a non-profit business.

Image via Flickr by State Farm