Become Your Own Financial Expert

When it comes to investing, the most common question I get asked is:

“What should I do with my money?”

I have saved up so much, what should I invest in?

A financial expert will be quick to give answers, answers based on getting you to patronize his financial products – stocks, investments, etc. There is nothing wrong with consulting a financial adviser, expert, or broker. The main problem is that what you will get is a sales pitch. They will tailor their advice to what they have on offer. They will not give you all options. They will only present what they have to offer you as your options.

For example, a stockbroker will not advise you to invest in real estate. A stock broker wants you to buy when the market is going up, and buy more when the market is going down (dollar cost averaging). Guess what? Each time you buy, they earn commissions. The advice they give you means more money in their pockets. If you doubt what I am saying, go to a stock broker and tell him you have a million naira and do not know what to do with it. He will advise you to buy stocks.

Ask an insurance broker, he will advise you to buy an investment-linked insurance product. Ask a real estate broker, he will advise you to put in on a property. Ask a commodity broker, you can guess the answer…

Consequently, the answer you get is not based on what is best for you but depends on who you ask and what they have on offer. This is why it is very risky not to become your own financial expert. The best investment you will ever make is in investing in your financial education to become your financial expert.

As a wannabe investor, you need to answer 2 critical questions

1) How can I differentiate between good and bad financial advice?
2) How can I differentiate between a good and bad investment?

How do you know? Most people don’t. They turn over their money to people they hope are financial experts and pray that they know what they are doing. They hand over control of their money to others because they are financially illiterate. They have no clue if they are getting the right financial advice if they are being sold the right investment, or if their adviser has any clue what he is talking about. They swallow everything hook, line, and sinker.

“The dumbest reason in the world to buy a stock is because it is going up” – Warren Buffet

“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those that ride the subway” – Warren Buffet

In the Nigerian context, I would say “Broad Street is the only place that people ride to in a Range Rover to get advice from those that ride to work in Danfo”. It is hilarious but sadly true. Experts sell products. They sell fish. They do not teach how to fish. They cannot teach how to fish because they earn their salaries from commission selling fish.

That is why someone who rode to work in a public bus will give financial advice to a client who rode in with the latest model Range Rover. It only happens in the world of the financially illiterate. The rich check you out before they consult you. They do not expect a naked man to offer them a shirt. This is not to bash Brokers et al. They are doing their job, and they do offer excellent advice, as they practically live in the market. The issue is, how do you protect yourself from bad financial advice and bad investments?

Do not become the fool and his money that soon part ways. Everyone knows how to spend your money except you. Want to know what to do with your money? Keep saving and allow your money to cool its heels in a high-interest money market instrument while you invest in your financial education to become your own financial expert. Then and only then should you dip your toes into the fast-moving waters of the investment world. Do not be in a hurry to jump in half-baked. There will always be good investments. Bad investments are the easiest to find.

Become your own financial expert. Invest in becoming your own financial adviser.