One of the questions that I get asked often has to be, “Let’s say I have an X amount of money, where is the best place to invest this money so that I can achieve the best returns.”
If you check my DMs and emails, you will see several versions of this question.
Others will phrase it this way,
“Gichuki, let’s say you have this amount of money, if it were you were in my shoes, where would you invest your money for the best returns.”
Others will ask, “Gichuki, if you can manage to save a certain amount of money per month, where could you be investing the money over time for best returns.”
Over The Counter Drugs
Whenever you visit the hospital, there’s a reason why you first start by consulting a doctor who asks some background questions to determine your health status. He then examines you and recommends that you proceed to the laboratory and take some tests.
It’s only after he evaluates the results from the lab that he can do a diagnosis and probably prescribe any drugs.
However, there are still people who take Over the Counter Drugs without a doctors’ prescription.
Recently, there has been an increase in the use of over-the-counter (OTC) drugs. The consumption of these medicines can be unsafe, as incorrect self-diagnosis or the ingestion of inappropriate doses can lead to side effects and the occurrence of adverse reactions and drug–drug interactions
In the same light, over the counter financial advice has increased over the past few years with the widespread use of social media.
Even when people add the “Not Investment Advice” caution to their posts, that information is still used to make financial decisions.
The Right Way To Take Financial Advice
In the investing profession, it is considered ethical to have an investor’s profile before recommending any investment product to them.
An investor profile is an evaluation test that helps the financial advisor evaluate how the investor stands against the factors that one should consider before they make any investment.
It helps determine the investors age, risk appetite, willingness and ability to take risk, income level, liquidity needs, financial goals, financial responsibilities, what assets you already own, etc
Without understanding your investor profile, I will probably not give the right kind of advice as it will not be personal or specific to you.
That’s why I can’t put myself in your shoes and recommend what I would invest in since we have very different investor profiles.
The Solutions
1. Financial Literacy
Financial literacy can help you understand how to manage your personal finances and investments. It helps you understand what investment options are available and how they can help you achieve your unique financial goals.
2. Financial Advisors
From my experience, most people cannot manage their personal finances and investments without help from a financial advisor.
If you don’t have the time to follow markets and scout for investment opportunities. Or you would like help in coming up with a financial plan and even manage your investments, then you need a financial advisor.
But be careful with financial advisors who tell you that they do not charge for consultations and then sell you products that hardly help you achieve your financial goals.
Take Over the Counter Financial Advice at Your Own Risk
The easiest way to get into financial ruin is to take financial advice that isn’t personalized to your unique investor profile. Financial advice should be personal and it should be a perfect match to your investor profile. It should take into account your age, your financial goals, your risk appetite. Your level of income, your current portfolio holdings, your future liquidity needs, your financial responsibilities, and other important factors that should be considered before making an investment decision.
Otherwise, you will find yourself taking a painkiller and wondering why it isn’t relieving your stomach upset. You will take financial advice that leads you to financial ruin. For if over the counter financial advice is your kind of advice, financial ruin is your kind of misery.
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