Things to be Cautious of
Photo by Leo Ma
There are a lot of bad actors in the personal finance world. There are also a lot of good faith actors but have a bias to push certain financial products. Here I have outlined my cautions to you as you learn more about personal finance. Remember that YOU are responsible for your own financial health.
Probably the most predatory scams in existence, steer clear like the plague. Most of the time a “financial advisor” will try to sell you these and they charge massive fees. Whole Life Insurance and Indexed Universal Life (IUL) can amount to over 80% of your investments over time. Term life insurance is the only life insurance policy worth getting if you have anyone dependent on your income.
PFC Article: Is IUL a Scam? Yes
1.) Life Insurance Products
2.) Financial Advisors That Charge a Percentage
Never pay a percentage of your investments. You can find financial advisors that charge a flat hourly fee instead. Even a 1% fee can amount to 25% or more of your investments over time.
Forbes Article: How a 1% Investment Fee Can Wreck Your Retirement
3.) Advertisements
Always be cautious of ads and sponsors. Even your favorite influencers may sometimes promote bad products. Many people in the personal finance world have a bias towards certain products or may even sell their own. That does not mean they are the best option.
4.) Credibility
Research people before reading their books or listening to their podcasts. One example can be found with the book, “Think and Grow Rich” by Napoleon Hill. I read this book with a book club and we had fun reading Napoleon’s Wikipedia page. Spoiler alert, he’s a documented fraud and I don’t recommend reading this book.
5.) Get Rich Quick Schemes
Understand that wealth grows slowly (then compounding speeds up rapidly). Be cautious of anyone that uses words like, “guaranteed”, “quick”, or “easy”. Be especially careful with, crypto, entrepreneur content, and even real estate. I sometimes indulge for fun and to learn more about other areas. However, I am particularly skeptical of taking their advice.