By Carl Richards
Carl Richards is a certified financial planner and the founder of Prasada Capital.
It is dangerous to mix investing with entertainment. The classic example is thinking that Jim Cramer is your investment adviser rather than some sort of circus clown. But what can be even more dangerous is taking what’s meant to be general financial information and acting on it, without first taking the time to figure out if it applies to your particular situation.
Making important decisions about how to invest your life savings seems to be getting more and more complex as the amount of information continues to grow. Take this article, “A Market Forecast That Says ‘Take Cover,’” that appeared in the The New York Times this weekend. It offers up advice from a market watcher who suggests that individual investors “move completely out of the market and hold cash and cash equivalents, like Treasury bills, for years to come.”
The article has been among the most e-mailed articles for several days, so it’s clearly getting a lot of attention. But the question is what you’re supposed to do with information (general advice) like this. Should you follow this advice to “take cover,” regardless of your age, unique goals and family situation?
What about the wisdom handed down by the more popular personal finance gurus like Suze Orman? Does the generic advice she gives apply to you? I can’t tell you how many times I have seen people make mistakes because Ms. Orman said to do something that did not apply to their situation. She may be a genius. She may even provide some good, general advice. But she is not your financial planner.
The financial press, personal finance bloggers and best-selling authors are all sources of information. But don’t confuse information with the real work of figuring out how it applies to your very unique situation. I know many of the best personal finance bloggers. As good as many of them are at providing a filter for information, and even providing general rules of thumb, you are the only one who can figure out how it applies to your life.
The reason is simple: planning for your financial future is personal. It has to be. A good plan will be unique to your situation, and what is right for your situation may be a disaster for your neighbor. So read as much as you want, but then make sure you spend the time to figure out how it applies to you before you make important decisions about your life savings.
Source: http://bucks.blogs.nytimes.com/2010/07/07/ignore-generic-financial-advice-except-this-post/
