I can still remember the buzz from a few decades ago about a new finance book. Some in my relational network were ready to get their house in order and start building wealth. This book provided the tools they needed to get them on that path. I’m pretty sure I either bought it or received it as a gift.
I don’t believe I ever read it.
Still haven’t.
Now the book may very good. It may have some helpful wealth-building principles in it, but the author’s investment advice over the last several years has been terrible. One individual in Internet land even overlayed a list of the author’s tweets over a chart of the stock market. As the link reveals, his predictions about crashes have been mostly wrong.
The purpose of this post isn’t to pick on the bestseller in question, Rich Dad, PoorDad, or its author Robert Kiyosaki, but to remind us that just because one person might have some good ideas, they may have some really bad ones too.
Remember fear sells. And no group is immune. In the business world, particular money managers or finance data-heads will flood you regularly with charts and research to justify why the crash is coming yesterday. In Christian circles, a self-proclaimed prophet might try to use the Bible and blood moons to indicate when the crash draweth nigh. In political spheres, your favorite candidate might promise the downfall of the market if so and so gets elected.
The thing that’s especially disturbing is some individuals do this multiple times and their followers drink it all up not realizing that it might be bad for their long-term financial health.
The point is: be careful who you listen to and what advice you go all-in on. It’s one thing to make moderate changes based on research. It’s another thing to sell your financial soul to the latest doomsayer because often while they are doing interviews and selling books, you’re sitting in cash scared spitless or off and running with their new investment idea that was just as volatile (or more) as the one you were already in.
Sure, a stock market crash will come again (we just had a fast one in 2020), but that doesn’t mean financial gurus get credit for it after promising it year after year ad nauseam. More importantly, while you need to recognize that stock markets correct and occasionally crash, they also have consistently been one of the best ways to beat inflation and grow your money over the long term.
Know your risk tolerance, time horizon, and have a portfolio that matches. Don’t be fueled by bleak pessimism or blind optimism. If you need a financial advisor or have friends and family that might be prone to the wrong kind of investment advice, we are here to help.