Thanks, But No Thanks for the Financial Advice, Tom


Over the past few years I have received quite a bit of well-intentioned, but misguided financial advice. Here are some specific examples and lessons I have learned from being offered this advice.

Tom (AKA The Rental Property Hater)

I used to work with a guy who freely gave out unsolicited financial advice on a regular basis. 

Let’s call him Tom.

I’ll never forget the day that Tom told me rental properties were a horrible investment and to avoid them at all costs. He explained how he owned an apartment complex in Texas many years ago and how the tenants were an absolute nightmare. They would constantly break appliances, pay their rent late, and generally give Tom a headache.

“Don’t waste your time on rental properties, Zach. The money is not worth the hassle.”

This advice seemed reasonable enough. The only problem was, it was entirely based off one apartment complex in one little town in Texas. It also contradicted the many financial bloggers I have read about who successfully use rental properties as an income machine to live the life of their dreams.

Tom had good intentions, but his advice wasn’t exactly financially sound. Just because he had one bad experience with rental properties didn’t justify his need to tell other people to avoid them as investments.

Thanks, but no thanks for the financial advice, Tom.

Lisa (AKA The Expensive College Promoter)

I used to have an academic advisor in college.

Let’s call her Lisa.

When I was a junior in my undergraduate years, I decided that I wanted to do a 4+1 program. This meant I could finish my bachelor’s degree in four years, but I could also get my Master’s degree with only one extra year of school instead of the usual two.

Lisa recommended that instead I apply to a more prestigious graduate program out of state. It was a two-year program that would cost $70,000 after financial aid. She assured me that the salary I would be earning after graduation would make the debt-repayment process take less than 10 years. Besides, it was an investment in my future, she said.

At the time I had zero college debt. I genuinely had no idea if $70k was a significant amount of debt and how long it would take to pay it off.

Blindly following the advice of my advisor, I applied for the out of state program and fortunately got rejected. I was forced to do the 4+1 program, which turned out to be one of the wisest financial decisions I have ever made. I was able to graduate not only debt free, but with a net worth of $30,000.

Lisa had good intentions. She wanted me to get a respectable degree from a prestigious university. Unfortunately this advice would have led me straight down a path to paying off debt for the next decade of my life.

Thanks, but no thanks for the financial advice, Lisa.

Bill (AKA The House-is-an-Investment Believer)

My dad has this one coworker.

Let’s call him Bill.

Bill came over to our house last year to talk with my dad about his retirement plans. During a break in the conversation, Bill leaned over to me.

“I heard you got a full time job now, that’s fantastic. You know the next step is to buy a house.”

I told him I actually planned on getting an apartment that year.

Bill was having none of that crazy talk.

“Renting is just throwing your money away! It’s literally the same as driving down the highway and tossing money out the windows. You should really consider buying a nice starter home. It’s a great investment. I’ve got a realtor friend, I’ll give you her number.”

I didn’t tell Bill that I had been voraciously reading articles about renting vs. buying and that a home actually shouldn’t be considered an investment. I also didn’t tell him that I wanted the freedom to pick up and travel on short notice, so owning a home wouldn’t make sense for me. I figured he would really think I’m crazy then.

Thanks, but no thanks for the financial advice, Bill.

Mike (AKA The Market Timer)

One of my friend’s parents have a friend who dabbles in the stock market.

Let’s call him Mike.

Last summer Mike found out that my friend’s parents owned a significant amount of Apple stock. Being a savvy stock trader, he advised that they sell as soon as they can. Apple was about to be overrun with competition, he explained.

My friend’s parents sold all of their shares for $95 each. Apple stock is now trading above $155 per share.

Nice market timing there, Mike.

My friend’s parents would have been much better off just sitting on their hands, ignoring the advice of anyone who is a short-term stocks trader. They should have politely said:

Thanks, but no thanks for the financial advice, Mike.

Biased Advice

Most of the time, when someone freely offers up financial advice, they’re speaking entirely from their own life experiences. 

Tom had a horrible rental property experience, so he told me to avoid that type of investment altogether.

Lisa believed the power of a prestigious degree was more important than student loan debt, so she advised that I apply to an out-of-state school.

Bill felt strongly that buying was a much smarter choice than renting, so he recommended that I buy a “starter home”.

Mike thought he knew the intricate details of Apple and their market competition, so he told my friend’s parents to sell their shares.

All of these people had good intentions. They were offering help. The problem is, their advice was biased. They had their own unique set of life circumstances and beliefs that impacted their financial perspective. These people were throwing out advice as if they were financial advisors, but none of them were. 

Make Your Own Financial Decisions

This isn’t to say that all financial advice is bad advice, but rather you should always do your own diligent research and make your own financial decisions at the end of the day.

The invention of the internet has made it unbelievably easy to acquire financial knowledge. If you don’t know the pros and cons of renting vs. buying, start reading some financial blogs to find out. You don’t need Bill to tell you what to do.

If you want to know the value of a degree compared to the debt you have to take on for it, check out statistics on salaries and use debt repayment calculators to see if the investment is worth it.

If you’re not sure whether rental properties should be in your portfolio, find people online who are actively using rental properties as an income source.

There are no excuses for not doing your own financial research and for making your own financial decisions. Feel free to listen to the advice of your friends, family, and coworkers, but acquire enough knowledge so that you can make your own financial decisions. Odds are, you’ll be better off for it.

My favorite free financial tool I use is Personal Capital. I use it to track my net worth, manage my spending, and keep an eye on my monthly cash flow. It only takes a few minutes to set up and it makes tracking your finances simple and easy. I recommend trying it out.

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Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.

6 Replies to “Thanks, But No Thanks for the Financial Advice, Tom”

  1. All good-intentioned, but it seems like emotion played a big part in their advice. If it worked or didn’t work for them, it was their best example and support for providing the advice. Advice should be based on an overall and macro perspective because like you said the same situation does not apply to everyone. 🙂

  2. Have you ever explained your point of view to these people? I think it’s worth engaging them in a conversation about why you’ve come to the opposite conclusion. I think they will be especially receptive to what you have to say if you do it in a way that acknowledges and/or asks about their experiences that have led them to these perspectives . “A house is an investment” is so common, I think a lot of people would be better off if they didn’t take that view, and outside of the FI community, I haven’t heard much resistance to the idea. I recently came across a quote: “success can usually be measured by the number of uncomfortable conversations we are willing to have, and by the number of uncomfortable actions we are willing to take.”

    1. Unfortunately the few times I have attempted to explain my point of view it hasn’t been well received, probably because my viewpoint is so radically different from most or because I’m often younger than the people I’m trying to explain my viewpoint to.

      I do like that quote and I think it holds a lot of truth. I haven’t had much success with the “uncomfortable conversations” by I have definitely embraced uncomfortable actions to reach a better place in life.

      Thanks for the feedback, Valerie, be sure to stay in touch 🙂

  3. It’s amazing how the “truth” that is shaped by people’s perceptions and experiences is so often inaccurate.

    Great reminder of how important it is to consult multiple sources of information when making important financial decisions. And so important for young people to remember that older doesn’t always mean wiser!

    Love the highland cow images in this and your morning routine posts. :o)

    1. I couldn’t agree more with you, Mrs. Grumby. It’s so important for everyone (especially young people) to do their own research before blindly accepting the financial advice that other people are dishing out.

      And thanks! I was searching for pictures of animals and these highland cows kept popping up haha, I thought they looked cool so I used them 🙂

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