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People you should not take Money advice from

Written by R A Stewart

Have you heard of the donkey story where an old man and his grandson were walking the donkey along the street?

If not here is the story:

An old man and his grandson were leading a donkey as they were walking along the road. A bystander said to them, “Why don’t you both get on the donkey and ride it?”

So they both rode the donkey but further down the road the second bystander said, “Hey look at that poor donkey having to carry two people; that is cruelty.”

So the boy got off the donkey and led it along the road while the old man rode it but further down the road, a third bystander said, “look at that poor boy having to walk while that old man is riding the donkey.”

So the old man got off the donkey and his grandson got on, however further down the road, a fourth bystander said, “Look at that poor old man, walking along the road while the lad is riding the donkey.”

So the boy got off the donkey and they both continued their journey as they both led the donkey on foot.

What is the moral of this story?

The short answer is that people can take away your power to think for yourself if you allow them to.

If you have a bit of money to spare there will always be people who think they know what you should do with it and a lot of these people have little or no savings of their own.

Here is an example:

I know someone who years ago made a fortune on sports betting. He turned a few hundred dollars into over thirty grand. In the early stages when he had about six grand his colleagues at work were giving him advice and one was to use the six grand for a deposit on a car. I told him that not only would he be back to square one but he would also have a debt to pay. 

He was sensible enough to ignore stupid advice like that. I did however, tell him that he should at least invest enough into his Kiwisaver account to get the government incentives.

Financial illiteracy is common which means it is vitally important to read books on personal finance and pick the brains of the authors rather than allowing random individuals to infect your mindset.

A bad attitude towards money can be a hindrance of wealth. I once said to a lady that her daughter should attend financial seminars when she is older in order to meet successful men. (She was 9 or 10 at the time). She said, “Men like that are selfish and stingy.”

I suppose if you are a gold digger you would think like that. I mean “who needs financial advice when you can just get a man”

It is worth remembering that some of the best financial writers are women, such as Frances Cook and Mary Holm. They strongly encourage women to take responsibility for their finances rather than just have a man as their financial plan.

The young people may not be your best source of financial advice either because they do not have the experience of investing like the older generation. 

One of the things which the financially illiterate say to reinforce their opinions is “You can’t take it all with you.”

That may be true, however, during one’s lifetime, there are life changing events which require savings. Here is a list:

Flatting 

Buying a car

Going on your Big OE

Further education

Saving for a house

Marriage

Children

Retirement 

Responsible people will get into the habit of saving from a very young age in order to be able to finance whatever crops up during their lifetime when they have the ability to do so. Stupid people will fritter away their discretionary spending money so that when a rainy day comes they have money squirrelled away for something to fall back on.

About this article

You may use this article as content for your ebook, website, or blog. The opinions in the article are of the writer’s own opinion and may not be applicable to your own personal circumstances therefore discretion is advised,

www.robertastewart.com

https://www.robertastewart.com

Your friends can be hindering your financial dreams

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New Zealand Financial Adviser says…

“3 Money Mistakes made by people”…

according to New Zealand financial advisor Frances Cook.

Frances Cook was on the AM show and explained the three mistakes made by people which are costing them hundreds of dollars every year.

Mistake number one

Not negotiating over price!

Frances says “Don’t just stay loyal to your power company but look elsewhere to see if you can get a better deal”

She advises people to shop around, for everything; that could be your power company, your internet supplier, or your phone company,” and not just stay loyal to them without questioning whether you may be better off with a competitor. “Start with one company and do your research to see what kind of deals they are offering, if you can ring them and bring it to their attention. They may give you a deal in order to retain you as their customer.

Mistake number two

Leaving your kiwisaver in a default fund.

Those who join kiwisaver and do not specify which fund they want their money in will automatically have their money in a default fund which is invested in conservative funds. The money is safe but the returns are very low meaning by the time those in conservative funds reach 65 their retirement nest egg will be smaller than it would have been if it was invested in balanced or growth funds.

This is applicable to those in New Zealand but it may apply to some abroad depending on how your retirement scheme works.

Mistake number three

Having a bad attitude

I couldn’t quite catch what Frances said was the third mistake but she did say that it was like not learning to swim because you don’t know how to. If you say, “I am not good or not interested with all this financial stuff,” then that kind of attitude will cost you a fortune over a lifetime. There is no excuse for staying ignorant about personal financial matters.

Gaining financial literacy is easy with so much information available online.

Check out Frances Cook’s website www.francescook.co.nz 

www.robertastewart.com

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Retirement Spending

INTRODUCTION

Spending your retirement years is not all about how you will spend your time but your money also. Ticking off those items on your bucket list becomes your priority. This all takes money. A financial advisor thinks older people should spend their money while they can and travel while they are able to.

Spending your money during your latter years

Written by R. A. Stewart

“Spend your money while you can.”

That is the message of New Zealand Financial Advisor Mary Holm who has recently published another book. 

This message was aimed at retirees. Ms Holm says you should not just leave your money to your children.

She says that she has received letters from people in their eighties and nineties who have said they wished they had done more traveling when they were able to. They were of course referring to when they were in their sixties and seventies.

Holm does have a point but it all depends on how responsible your children are with their money. If they have a house and a retirement plan then you can stipulate that the money can go toward these things. 

Doing stuff while you are able to is probably the best way to live for those who have reached the retirement age and that all takes money.

What Mary says makes sense; helping your children get their foot on the property ladder or through university is one thing but if they are irresponsible with their money then that is another thing altogether. 

This all highlights the importance of teaching your children financial literacy. 

Teaching your children how to invest is just as important as teaching them how to save. Most people are able to save money but most are saving to spend rather than saving to invest.

It is investing which will make life easier in the long-term.

Your priorities will determine how you are going to spend your latter years and there is no law to say that you have to retire at a certain age; a lady in her eighties was still working at our local supermarket. Everyone is on their own I suppose but I don’t see the point of that since our country (New Zealand) is very generous to its retirees. It was only ill health which caused her to stop working and then she succumbed to her illness not long after.

Deciding what is important to you is all about setting goals; Anthony Robbins book, “Awaken the Giant within,” is certainly worth reading. 

In the chapter on “Goal Setting,” he talks about taking the rocking chair test. If you were to sit in your rocking chair at the age of ninety what would you regret about your life?”

“Don’t die wondering,” is a saying worth remembering. It is important to enjoy the stage of life you are at because there may come a day when you regret not having made the most of that particular stage of life.

Planning for the future is just as important; its getting that balance right which is the key. There is no point in blowing your retirement fund during your first year of retirement if it is going to leave you in poverty for your remaining years.

SUMMARY

A work colleague said to us once, “I can’t understand these old people who live frugal lives only to leave their money to someone else.” Making sacrifices in order to save money is understandable when you are younger but not when you are past the retirement age. (unless you are living from paycheck to paycheck). Live your best life now while you can and not just hoard your money for the younger generation to fritter away.

www.robertastewart.com

 

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6 Ways to Make Capital Gains

6 Ways to Make Capital Gains

Written by R. A. Stewart

There are basically two types of investment income. Capital Gains and Investment Income.

Investment income is income you receive from an asset, examples of investment income are interest on savings, rent from property, and dividends from shares.

Capital gains is the increased value of an asset; examples of capital gains is the increased value of property, shares, and other assets.

Some investments provide capital gains but no income; examples of these are precious metals such as gold, bitcoin, antiques and other collectable items.

Here are investments which provide Capital Gains:

The Sharemarket

The sharemarket offers excellent opportunities for capital gain. For most people, investing directly into the markets is not an option because the transaction fees once taken out for buying and selling shares make it not worth their while, however, there are plenty of managed funds investors with limited means can participate in. Sharesies in New Zealand  is one.  Investors can drip feed money into the markets with Sharesies and there is the option of investing in various funds or individual companies. Other similar types of platforms in New Zealand  are Investnow, Kernelwealth, and Hatch. These are not the only ones though. 

Your retirement scheme invests in managed (Mutual Funds) and they are also a form of Capital Gains. In New Zealand joining kiwisaver is a no brainer. KIwisaver is New Zealand’s retirement scheme.

Property

The property market has been a popular Captain Gains tool for a lot of investors using not only their money but other people’s money in the form of a loan. Income is gained from rents which pays for the mortgage. All related costs are the most popular form of capital gains and the easiest one for the novice investor to get their toe wet in the markets and learn as you go because there are several mutual funds which are available and the start up costs are minimal. In New Zealand Sharesies only costs $1 to get into which gives you the chance to invest in managed funds or individual companies. It is a great way for tax deductible. This type of investment can turn to custard such as wayward tenants. If you are prepared to take the risk then this investment may suit.

Your own home is a good source of Capital Gains if you intend to sell at some point.

Another way to get in on the property ladder is to purchase shares in property investment companies in the sharemarket. This can be done by investing in individual companies or managed funds which invest in property.

Compound Interest

You must have heard of compound interest; that is when you invest in fixed term accounts for x% interest. Instead of receiving your interest payments into your bank account you let them be added on to your principal and you earn interest on your principal and previous interest payments. This is called compounded interest. 

The increase to your capital is called “Capital Gains.”

Interest rates are very low at present (2020); in some instances lower than the inflation rate which makes this kind of investing less attractive. It is important therefore to do your due diligence and not be enticed by some finance company offering higher interest rates than normal, because with higher interest rates comes higher risk. These finance companies offering higher interest rates lend to higher risk types of borrowers. 

I am not saying that you should not invest your money in these companies but rather do your due diligence and at least diversify your portfolio rather than plonking all of your life savings into the ione company.

Gold

This one is purely speculative but can be a good hedge against a downturn in the markets. The one drawback with gold is finding a place to store it. Another way to invest in gold is buying gold stocks in the sharemarket. Purchasing gold coins from auction sites such as Ebay and Trademe is another option. As with other investments it pays to do your homework and read all you can about gold and other precious metals. 

Crypto Currency

Crypto currency such as Bitcoin and the like should be treated as speculative investments, therefore, only invest money in this if you can afford to lose it. What I am saying is use your discretionary income to purchase crypto currency. This type of investing can be a rollercoaster but one piece of advice which may be useful is to not just purchase all your crypto currency in one transaction but to do on a weekly, fortnightly, or monthly basis so that there is a chance that you have made a purchase when the currency is low. It is called averaging.

Collectables/Antiques

Investing in collectibles can give you a sense of satisfaction and profit when you intend to sell. You really have to know your stuff when dealing in antiques. Always remember, something is only worth what others are prepared to pay for. If someone is prepared to pay $1,000 for a painting at auction then that is what it is worth, however, if another painting is sold at auction for just $10, then that is it’s worth. The value of something is only a matter of opinion.

Recently (2020), some Banksy paintings sold for over $100,000 in New Zealand. The seller of the paintings paid a total of $500 for them in London (UK) some years earlier. It just shows how one’s eye for a bargain can be profitable.

For smaller items such as postage stamps, bank notes, beer labels, and so forth collectors can list their duplicates on auction websites to help fund their hobby.

This article is of the writer’s opinion and experience and may not be applicable to your personal circumstances therefore discretion is advised.

Feel free to share this article. You may use it as content for your blog/ebook.

 

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How to make or lose a fortune

Written by R. A. Stewart

“How can I make a fortune on the share market?”-a question some random person may be thinking to him or herself and if I really knew the answer to that question then I would be rich beyond my wildest dreams.

I can’t tell you how to get rich but at least I can give you some hints to help save you losing your shirt and a lot more.

Share prices do not always represent value, but rather the opinions of the wisest men in finance. The markets tell the story of the times. The stock market moves according to the news coming out from various companies. Shares prices are often ahead of actual happenings.

When you are trading on shares you are competing with some of the best financial brains in the country. They have the benefit of years of research and experience behind them. Not to mention huge financial resources and every conceivable aid to assist them.

Never lose sight of the fact that someone’s gain is nearly always someone else’s loss-don’t let it be yours. Share prices can drop sudden and faster than they rise. Don’t let it overwhelm you.

A “tip” is just an opinion. There are plenty of people who are willing to advise you to sell or to buy. Don’t let any of this throw you off course.

Some companies have professional directors whose job it is to enhance the company’s image. They add little else to the company’s bottom line.

All of the glossy brochures about a company may look impressive but they can be doctored to look better than they really are.

The financial jungle can be rough and those losses can be hard to swallow but one must learn to take a financial hit occasional and not be discouraged from taking further risks. When I say risks I mean calculated ones. 

If you are going to make yourself ill by worrying if your shares drop by a percentage point or more then stay out of the share market and be a little more on the conservative side with your investing. 

In this day and age with modern technology and online share market platforms it is much easier for ordinary people to build a portfolio on a modest income. Managed funds enable anyone to tap into the best financial brains in finance-even the financially ignorant.

Even so, keeping up to date with the financial world will help you in the long run.

Share trading can be divided into three categories.

1 Long term: For people wanting to build a nest egg for their retirement. The type of investment will depend on your risk profile and your age. Investors may want to just invest regularly into this type of fund and forget them.

2 Medium Term: For investors wanting a reasonable return up to five years with a chance of a capital gain.

3 Short term: This is for money that may be needed within the next 12-24 months. It should be placed in more conservative accounts. Money in this category may be required for appliance repairs or replacement and so forth. It is for the unforeseeable expenses. Many financial advisors even suggest having an emergency fund for this purpose.

About this article

This article is of the opinion of the writer and may not necessarily be applicable to your own personal circumstances, therefore caution is advised. Read my other articles on www.robertastewart.com 

 

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Diversification in the share market

Written by Robert A. Stewart

Diversification is a term we often come across in the investment industry but what does this really mean for the Mum and Dad investor and how can the ordinary investor profit from diversification? Here is an article written in simple language which everyday investors can understand.

Diversification in the share market

What it is and how you can make it work for you

Diversify, diversify, diversify are terms you will come across in the world of investments so what does it mean and how can you make it work to grow your wealth?

When someone says you should diversify your investments what is meant is that your investments are spread out among different companies and sectors in order to reduce your risk.

An investor may have shares in a phone company, a power company, a bank, an insurance company and so on.

This kind of diversification was once beyond the means of the average investor because one had to purchase at least $3,000 worth of each share just to make it viable because of the broker’s commission on each buy and sell transaction.

Not any more!

Online share market trading platforms such as Sharesies in New Zealand and Robinhood in the US have opened the way for anyone of any means to get involved in the markets. These platforms enable anyone to build up their financial literacy on a shoestring. There are lots of other online investment platforms similar to Sharesies and Robinhood which gives you a wide choice. 

With sharesies the minimum investment you can make is $5 but with Kernel Wealth, another online investment platform in New Zealand the minimum investment is $100. This is just an example of different rules for different companies.

Mum and Dad investors can buy into a range of diverse companies on a shoestring with sharesies and robin hood which in the long term is good for those astute enough to participate.

Investing in individual companies is not the only way to build up a diverse portfolio; the other way is investing in managed funds or as it is referred to in the States, Mutual Funds. 

When buying into these funds you are combining your money with other investors to purchase units  in the funds. Fund managers will purchase shares in a range of companies on your behalf.

The level of risk can vary depending on the industry in which the fund manager invests your money.

These investments are generally referred to as Growth Funds which have the potential to grow your savings but at a higher risk. 

Those investors who want a mixture of high risk and low risk funds will invest in what is called Balanced funds. This is a combination of growth and balanced funds. Investors may have the option of choosing which percentage of their investment they would like in growth or conservative funds..

Diversification is an excellent wealth building strategy for the average investors who wants to create a nest egg for the future. It is a matter knowing what you want to achieve with your investments and investing accordingly.

About this article

This article is based on the writer’s experience and may not be applicable to your personal circumstances therefore discretion is advised. You are welcome to use this article as content for your ebook or website. Feel free to share this article. 

www.robertastewart.com

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Prioritising your spending

Prioritising your spending

Written by R. A. Stewart

Life is all about making prioritise and it is not all about money and how you prioritise your spending but about what you do with your time. We have different financial commitments and different levels of income but when it comes to time, we all have an allotted 24 hours in the day, no more and no less but our income and how we earn our income will have an effect on how much time we have to devote to the important things in our life.

Many people sacrifice their time for money by spending all of their time working leaving little time for anything else. They are out of balance.

If you have a specific goal in mind such as saving for a house deposit then the sacrifices may be worth it in the long term. Maybe because only you will know whether the long days were truly worth it. It al depends on what your priorities are.

What factors should you consider when setting priorities?

Here are several to consider:

Your commitments

Your commitments will have an effect on what you are able to spend your money on. Most people have commitments of some kind and these will having a bearing on your financial spending. 

Your debt levels

Any debts you may have will have a bearing on your spending. If you have a mortgage or other debt then saving up for an overseas holiday will not be on the radar nor will spending money on things which are considered to be wants rather than needs.

Your age

Your birthday will make a difference to how you spend your money. If you are in your 60s then you are not going to plan 30 years ahead. The young ones have tat luxury. Retired people are at the spending phase of their life. That does not mean to go out and blow your retirement fund all at once but rather enjoy life to the max by ticking off those items on your bucket list.

Your family circumstances

Your family situation will determine your priorities. A single person without any kids will have different priorities than someone who is married with kids. A married person is not going to make decisions based on themselves but has to consider their spouse and plan their journey together.

Your health

Your health is another factor to consider. If you have issues concerning your health then that will be a factor in how you prioritise your spending because you may not be able to work the hours you previously did which means that less money is coming in.

Your career

Another factor. Every career has its own unique set of challenges which have to be dealt with. 

Your pets

If you own pets then you have a responsibility to take care of their needs. However, it is important to think things through before deciding to get a pet because they can be a drain on your time, not to mention finances.

What now?

Who am I to tell you what you should do with your money but if your priorities in life always involves spending money and not investing it then somewhere down the road it will all catch up with you with that medical or dentistry bill and you do not have the funds to pay for it.

Hopefully this will at least serve as some kind of guide to setting goals for managing your money.

ABOUT THIS ARTICLE

The information contained in this article is of the personal opinion of the writer and may not necessarily be applicable to your personal circumstances. Please feel free to share this article. You may use this article as content for your blog/website/ or ebook.

www.robertastewart.com

 

Start investing on a shoestring

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

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Investing in share trading platforms

Investing in share trading platforms

Online share market platforms are gaining in popularity; they provide a terrific opportunity for ordinary folk to get involved in the share market on a shoestring budget. Just deposit $5, $10, $20, or more per week and given the benefit of time and patience this can all grow into a tidy sum.

The beauty of this is that your financial literacy increases as you get more and more involved in choosing which shares to buy.

In New Zealand Sharesies is the number one share market platform. It enables anyone of small means to invest directly into the share market and even in individual companies. 80% of sharesies investors are under 40 so it is appealing to the young folk. That is a good thing as it shows that the young are interested in matters of finance. It is also a good thing that the young are improving their financial literacy.

I cannot speak for other sharesies investors but here is my strategy. It may not necessarily be right for your personal circumstances but I will share it with you. 

I choose one company per year to invest in with sharesies and drip feed money into it every two weeks which means that whether its share price is up or down I have bought shares in it. If I had just made one purchase of the share then chances are that I have bought it at the higher price and its value has dropped a few weeks later but spreading my investment out means that I have bought some at the lower price.

You can use different strategies to suit your budget, goals and personal circumstances.

Here is the link to join Sharesies if you are keen to give investing a go. This is only for those living in New Zealand or Australia.

 

https://sharesies.com/r/377DFM

www.robertastewart.com

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How to spend your money

This article was obtained from a PLR website. I have decided to share it with you. As usual the advice may not be applicable to your personal circumstances.

Improving how to spend your money

It is important to be aware of where your money goes in order to correct any bad habits

Money may not be with you all throughout the year. There are downs and ups when we talk about the financial resources and income of an individual or family. In dealing with financial difficulties, there is a need to have budgeting techniques as early as possible. There is a need for us on how to master the art of stretching the capacity of our available money. 

It is but normal to commit errors especially when you are not yet used to doing things your job calls for you to. But, do not make those mistakes that you would surely regret in the long run. As soon as you could, you have to develop a great way of managing to budget your money. There are some tips you could remind yourself of. These would be points you could use in making or establishing good means to improve the way you budget your money.

  • Make a list of your unwanted budgeting habits. This includes all those you think of being not useful or helpful for you and your financial needs and financial security.
  • You plan on what to do in order to take the first steps in changing your old habits or acts in which they made your budget method a failure.
  • Manage your income and the amount of money you spend by preparing a sort of tally sheet of such information.
  • Prepare your spend plan. This must include your foreseen expenditures.
  • Collect receipts and note bigger amount spent 
  • Limit spending by looking for some alternatives to it
  • As much as possible do not use many credit card or checks.

Those above-mentioned points are really a great reminder for you. If followed, you would clearly see the improvement in your budget techniques. It would surely result to better financial management capacities for you. 

When this is achieved, you would definitely live a more satisfactory life. The right way of how you budget what you need as a winning one in the field of financing one’s self.

It is important that you set personal goals that are your own and not be influenced by how others are living. People who have no goals or ambitions just fritter their money away and are left at the mercy of life’s misfortunes for stuff happens such as a car breakdown, dental emergency, house repairs, or some appliance such as the toaster, electric jug, dryer, or washing machine breaking down. An individual who manages their money well will be able to pay for these emergencies without using credit of some kind.

www.robertastewart.com

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MISTAKES MADE BY INVESTORS

Mistakes made by ordinary investors

MISTAKES MADE BY INVESTORS

Written by R. A. Stewart

We all make mistakes; none more so than when we are making investments but it is important to learn from your mistakes in order not to repeat them. It is also important for investors to note that a financial mistake should not be a deterrent to making further investments. Just keep saving and investing and that will make life easier later on.

Mistakes made by ordinary investors

If you have money invested in your country’s retirement plan then you are an investor whether you know anything about the markets or not. Chances are you have your money investyed in some kind of mutual fund which is managed by a fund manager who invests on your behalf. It is up to you to decide on which fund to invest in and for how long.

1-Too Conservative

You have got to learn how to be an investor and take calculated risks; there are no two ways about it. You can manage these risks to take into consideration you age, goals, and your timeline. If you have your money in conservative funds and you are in your twenties then your retirement fund will fall far short of where it is likely to be when you retire. Investing in growth funds is all about achieving capital gains.

2-Too inconsistent

Lack of consistency as far as contributing to your retirement fund will cost you in the long run. It is easy to be consistent in your contributions when the share market is going strong but it is when the markets are bearish that you need to motivate yourself to keep investing because during the low points is when there are bargains in the share market. If you are working in some type of job then a percentage of your gross wages will be deducted and deposited into your kiwisaver account.

3-Too Emotional

Fear and greed is what drives the share market is an old cliche which rings true. Many investors react to the market’s swings and roundabouts and sell when they should hang on to their stocks. Investing in the share market is a long term game; it is not a sprint, it is a marathon. If you have some kind of retirement fund then your fund manager invests on your behalf, however if you are in New Zealand you are able to switch funds which some investors do in reaction to what the market is doing. If you have some kind of financial goals then this should take into consideration a possible share market crash.

4-Too Greedy

Many investors are simply too greedy; they invest in something offering high returns without paying any attention to the risk they are taking on, or worse still, they place all of their eggs in one basket hoping to make a killing. This all or nothing approach has destroyed several retirement plans. This was certainly the case when several investors saw their life savings disappear with the collapse of several finance companies. Diversification minimizes your risk.

5-Too Impatient

Patience is the name of the game in investing. It is time and not timing which will build your retirement riches. There will be ups and downs in the markets but a bit of patience will pay off in the long run. Something some people do not have so the invest in risky stuff offering quick returns and end up ,losing more often than not.

6-Too Gullible

There are offers or as the are called “opportunities,”promoted online mostly and sometimes in the print media as a way of making quick profits. If an investment seems too good to be true then it mostly certainly is. Usually the person or company promoted such offers are the ones making money out of it. You may have read stories about the amount of money such people have made from whatever it is being promoted but tey are in the minority.

It is up to investors to take responsibility for their own decisions and not try to find a scapegoat if things turn to custard.

ABOUT THIS ARTICLE

This article is based on the writer’s own experience and opinion and may not be applicable to your personal circumstances. Please do your own due diligence when investing. You may share this article or use it as content for your ebook or website.