What is the worst financial advice you have received?

20+ years ago I bought 100 shares of Lowe's on the advice of Money Magazine which touted it as their "stock of the year". It lost 30% and I sold out. Probably would have been a decent stock over the past couple decades but learned a good lesson about taking advice on specific stocks.
 
When I bought my home on July 1st 1994, everyone, & I mean EVERYONE, told me to go with the fixed rate of 9.25%

Avoid the adjustable rate of 6.375 at all costs!

I've always been a bit of a contrarian, so I went against everyones advice & chose the adjustable.

It got as high as 7.19% two years later (and I'll be honest, I was sweating a little) but has went down ever since.
It's around 3.30% now.

BTW: At the time, Norwest Bank (now part of wells fargo) offered slightly lower rates on both the fixed & adjustable.

What sold me on Wells Federal (smaller hometown bank) was that the president told me the following when I asked him if my loan would be sold/transferred to another bank ?

"I can't guarantee the future, but we have NEVER sold/transferred mortgages to another bank"

In the almost 20 years I've been making payments, there's been about 3 or 4 times when I totally forgot the payment & didn't realize it until I received a notice in the mail.

Each time I immediately went to the bank & made my payment.
They never reported this to any credit agencies etc.

Would Norwest/Wells Federal have been so kind ?
I highly doubt it.

Moral of the story ?
Stick with local businesses whenever possible.
Support your community & say screw you to the (too big to fail) businesses.
 
martyb said:
Keep all your TSP money in the "G" fund, because it'll never lose money, like the stock funds do. You may not make as much, but you'll never lose any either.
Click to expand...

If this is the worst advice you ever got, you've had pretty good financial advice! I suspect that someday my entire TSP balance will be in the G fund. There's a lot of merit to using the G fund, and perhaps exclusively, at certain points particularly if you have other accounts with equities, etc.

Now, I sure as hell wouldn't go all in on G during the accumulation phase!!

Every morning, the commercials on my sports talk radio show of choice are always urging me to buy physical gold since the dollar is crashing and the stock market is going to collapse... does that count?
 
At the bottom of the 2008 crash my Dad called me and for the first time in my adult life gave me very specific financial advice. "Sell your stocks in your 401K". He was panicked about my retirement (he gets an excellent govt pension so he wasn't worried so much about his own retirement). And I listened to him. Ugh.

It gets worse. I didn't get back in to the market until 6 months ago.

But my biggest money mistake ever is not tied to bad advice. It was that until recently (almost 50 years old!) I never took the time to learn about investing - reading about risk/reward, asset allocation, rebalancing, braving the dips, etc. Dumb, dumb, dumb. If I had spent just a bit of time/energy on learning about how to manage my investments (it's my hard-earned money for goodness sake!), then I wouldn't have taken Dad's bad investment advice (which was given by him out of concern for me).
 
In 2006 or 2007 my sister and BIL invited us to a summer BBQ at their house. The gathering included many of her and BILs friends, some of whom were much wealthier than us. I had met many if them before and heard about their vacation homes, big careers and sports cars.

She proceeded to start a "presentation" to everyone over cocktails about an investment opportunity that she and BIL were involved with and wanted to share with their close personal friends.

The minimum investment was $100,000, but because of the special opportunity we could get in for just $50,000. She passed around a lovely notebook outlining what a unique opportunity this was to get involved in this very special investment group. One particular opportunity was in funding G rated movies for families. Another one was some alarm company that needed some funding. All good, clean happy investments.

DH and our older son were there and we were literally rolling our eyes at each other. What the heck were my sister and BIL into? Luckily for us she knew we didn't have a spare $50,000, she just wanted us there to rub elbows with her ritzy friends and maybe show off that in her world this is how people play with their spare change.

I found out later that some of the people really did invest. Most, if not all was lost in 2008/2009 but even if the economic problems had not happened I think this would all have been lost anyways. The guy running the fund had a long record of lawsuits and bankruptcy filings. A couple of foreclosures, too. Yep, I googled him.

My sister lost her 50k and BIL lost another 50k. Fortunately, this was not life altering for them, just a risk they accepted. But she lost a few friends. She also told me that the guy running the fund was in trouble with the IRS for not filing his taxes for a few years. Sounds like an episode of CNBCs American Greed show.

The website for this fund is gone now, but when it was still around it all LOOKED SO LEGITIMATE. Once in a while I google the name of the fund guy just to see if he's in prison yet.
 
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My sister and her husband once tried to get us into Amway (Scamway?). You know, that pyramid product selling company? At least we had the good sense to avoid that one.
 
I am not sure I have ever received investment advice. Salesmen flogging some product sure, but this was so clearly self serving I didn't classify it as advice.

I have received answers to specific questions on this board, but not much flat out advice. If I did receive any of this, I don't remember. I've been retired since I was ~45, started SS at 70, have no pension and had my portfolio severely trimmed by a divorce at 66, after being separated for 6-7 years. So I really am not looking for methods and guidelines, I think mine work fine, and I do understand them. They don't have aspects that seem irrational like Firecalc. They however have no special magic.

IMO, a long retirement is always a challenge, and nothing other than large amounts of money and relatively low withdrawals can affect this much. Also, I strongly believe that suffering large drawdowns is quite negative. I'll take a little judicious market timing any day, even though certain quarters of the board heap scorn on this. However, few if any of these people have been successfully retired for 25+ years.

Ha
 
Live Free said:
My sister and her husband once tried to get us into Amway (Scamway?). You know, that pyramid product selling company? At least we had the good sense to avoid that one.
Click to expand...

Oh yeah, some guy from my A/C days tried to recruit me for that. A big turn-off for me was how secretive he was about it at work until he could make his full presentation. After that, even at ~21 years old my financial spidy-sense was tingling so I declined.
 
I haven't received much financial advice outside of my own research and this forum. However, I did just have a co-worker try to convince me that borrowing against your 401K was a good idea whenever you are in a pinch for cash. This was following his decision to purchase a new motorcycle with a 401k loan. His logic was that all of his "lawyer friends" were doing it so it was the right thing to do!?
 
Years ago, a friend who often invested heavily in the latest hot stocks, suggested two things:

Buy naked calls on Commodore (I didn't buy them, he did, they went belly up)
Mortgage the house, put EVERYTHING you have into 3DO Systems. Their first product was released in '94 and they went belly up in '96.
There was also @Home and MANY other internet companies that were touted as the next big thing.
 
I also got heavily pressured by a relative to join Amway. The pitch was, "Since you're so lonely [age 22, in a new state, on my own for the first time] this will be a great way to meet new people! Smart, classy people, like you!" This was much more heavily emotionally loaded than it would seem - you'd have to have been there to appreciate just how manipulative she was trying to be.

Caving under pressure, I did go to an Amway presentation. People were actually chanting Amway slogans. It reminded me of the "Big Brother Worship Sessions" in Orwell's 1984. I was also offended by the Amway representatives bragging about fancy cars, etc. which they had supposedly bought with their Amway earnings. To me, this sounded like circus barker stuff. I wanted to run - fast - in the opposite direction. The relative was very put out with me and said I was throwing away a wonderful opportunity. Oh - and that I had wasted her time!

Amethyst

Live Free said:
My sister and her husband once tried to get us into Amway (Scamway?). You know, that pyramid product selling company? At least we had the good sense to avoid that one.
Click to expand...
 
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I read a lot about finance, but haven't followed any advice, good or bad.
Not rich, not poor... just happy.
 
Let's load up on Cisco @65/share, it's a steal. We need to diversify so let's spread your money across these 5 different fund families (just 5.75% front loaded, cheap)...

- A.G. Edwards, circa 1999
 
DoWright said:
Years ago, a friend who often invested heavily in the latest hot stocks, suggested two things:

Buy naked calls on Commodore (I didn't buy them, he did, they went belly up)
Mortgage the house, put EVERYTHING you have into 3DO Systems. Their first product was released in '94 and they went belly up in '96.
There was also @Home and MANY other internet companies that were touted as the next big thing.
Click to expand...

Oh yes, the good old "tech wreck", how could we forget. Learned a lot of good life lessons around that time...
 
I've never really been given financial advice so nothing to offer.

One thing I did kick myself over was my 401k offered an Evergreen Core Bond Fund which sounded like a generic bond fund and I had some of my contributions in that. At the end of 2008 I noticed it had been nicked by 20% whereas my Vanguard Total Bond was only down about 5% IIRC. Come to find out, Evergreen had made some big bets on MBS that didn't work out. Learned to read the offering documents more carefully from that point forward.
 
I had forgotten all about the Amway pitch, even at the tender age of 20 I knew better. Twenty some years later a co-w*orker tried to get us to come to a pitch, same secretive approach. I finally told her this sounds like Amway, if it is I'm out. Weird thing is the guy above her in the pyramid quit a good paying IT job to do scamway full time. Never knew what happened to him, perhaps he's an Ameriprise advisor now.
 
nash031 said:
If this is the worst advice you ever got, you've had pretty good financial advice! I suspect that someday my entire TSP balance will be in the G fund. There's a lot of merit to using the G fund, and perhaps exclusively, at certain points particularly if you have other accounts with equities, etc.

Now, I sure as hell wouldn't go all in on G during the accumulation phase!!

Every morning, the commercials on my sports talk radio show of choice are always urging me to buy physical gold since the dollar is crashing and the stock market is going to collapse... does that count?
Click to expand...

Was definitely during accumulation...around '04 or '05.
 
We are all buying into this amazing company called WorldCom. If you don't get in now, you'll still be working here (at megacorp) when the rest of us are all enjoying the good life on a beach somewhere.

I resisted buying. And of the people in the at work investment group, I am the only one enjoying the good life now.
 
From family who is a professional broker (not for me anymore!!!)

1)Exodus communications-- tech bubble casualty -huge loss
2)buy more Citibank -dollar cost average in...all the way down down down...
 
"More millionaires are made by real estate than any other method." From a pitch in the late 80's. This pitch specifically was geared towards flipping properties.

While real estate can be good investment, a lot of people have lost significant amounts. There is also no free lunch, real estate requires your involvement and time to be successful.
 
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