Avoid Investing in Financial Fads and Keep Your Money Safe

By Ryan Laspina
Senior Specialist, Red Flags and External Reviews

Every year, new financial fads pop up that lead people to make irrational decisions to capitalize on the fad and perhaps make some money. The result is sometimes disastrous, such as the risky investments that caused the 1929 stock market crash.

Other fads do not have such a global impact, but they can put individuals in a really bad financial situation. Here are some tips on how to avoid falling victim to some of these fads.

Avoid Making Rash Decisions on Any Emerging Financial Instruments

Bitcoin and other cryptocurrencies are the newest investments in vogue. Some people may be making a lot of money investing in these cryptocurrencies. But these instruments are highly volatile and might not have much staying power.

Unless you have money to put into risky investments, you should think long and hard before investing in bitcoins. As with any investment, you need to determine how much you are willing to lose if your investment does not do as well as you hoped.

Do Not Take Financial Advice from Celebrity Endorsers, the Media or Television Commercials

Plenty of people are paid to endorse schemes and deals that tell you how to invest your money or reduce your debt. The best resource for you, however, is a trusted and properly certified financial planner.

Invest in Yourself, Your Family and Your Future before Any Financial Fads

Savings accounts, protected certificates, government bonds and a 401(k) account should be the first place you invest any money. Stocks, bonds and other investment instruments can wait.

Avoid Putting Your Wealth in Precious Metals

While some commercials and TV programs will tell you that gold and silver hold their value forever, you should always keep your earnings as liquid as possible. Checking and savings accounts are usually the safest places for your money. A certain amount of cash on hand is also advisable, but putting your money in precious metals can be cumbersome and completely unnecessary.

If you are not comfortable making important financial decisions by yourself (and you should not feel ashamed if that is the case!), hire a trusted, professional financial planner. He or she will give you solid, fact-based advice.

So, the next time you hear about the latest financial fads, stop and think about them long and hard. Do your own research and consult with a trusted advisor.

Remember the old adage: If it sounds too good to be true, it probably is. More likely than not, you will be happy you did not follow the latest fad.