Every golf pro (that sells golf equipment) tells me that to improve my golf game I need two things:
- Expensive lessons from the Pro
- a new set of golf clubs (sold to me by the pro).
The implication of the statements made are simple, it is not that I simply have no aptitude for Golf (nor much athletic talent), just that all I need to do is throw money at the problem and it will all be fixed (at least the Pro will be a little richer).
The other odd assumption in that advice is that if something is expensive (i.e. the Golf Clubs), the better it must be for me. I actually believed that for a while, until I watched a friend who is a very good golfer play with a set of rented clubs and shoot an 80, with clubs he hadn’t ever seen before. His statement was he might have shot a bit better with his own clubs, but that the equipment can only do so much to improve things.
What does this have to do with Money and Investing? Well remember my first theory of Golf and Money (i.e. you need to go back to when you were 10 and start playing Golf , and you should go back to when you are twenty and invest in your retirement).
The case for paying for a premium financial service in most cases is a fallacy:
- By paying premium rates for your trades at a brokerage house, are you getting any better service in terms of trades?
- Does paying premium service fees for your banking, mean you are not being ripped off?
- If your “financial advisor” charges you a lot, this does not guarantee that you are getting quality advice (just as those who say they charge you nothing might well be ripping you off ).
- Your Mutual Fund company might argue that their funds need an MER at 4.5% because they do such a great job investing for you. Pure hokum or bunk (in my opinion).
You need to figure out whether you are getting value for your money yourself, and also understand your own talents (and limitations) in terms of managing your money.
I will likely never break 100 playing golf, thus I don’t give out Golf advice (other than you should start at age 10, and not wait until you are 23 to take up the game). The same is true when it comes to investing, and personal finances, I can tell you what I have done wrong, and what seems to have worked for me ( so far ), however none of this may work for you. Collect advice from folks, but at the end of it, you will need to decide whether you view it as valuable or not.
Who Profits From This
If you don’t feel comfortable investing, then yes, talk to someone, but figure out whether they are simply selling you things to make THEM money, or make YOU money. The other option is just use passive investing tools like Index Funds based on solid indexes and be done with it.
When it comes to Money, like with Golf: Know your talents, but know your limitations as well.