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Financial Advice that Makes You POOR

 So, did I get that right? 20% in commodity, 30% in stock, 40% in crypto, 40% real estate and rest in business. So, that is how I grow my portfolio to 200% of what it currently is.


 Before I go any further, I must tell you that I'm not a registered qualified financial advisor. So, whatever I say is purely my understanding and my experience. If you want personal finance advice, please speak to a regulated financial advisor.



With that said, honestly, there's so much of terrible financial advice out there that gets dished out by influencers, and I wonder who makes money off the back that advice, because frankly, that's very, very questionable advice.


 But obviously we don't live in a perfect world, in a perfect society, so, let's talk about the five types of finfluencers that you are better off avoiding.



1. Commodity traders

 Commodity traders come in a lot of shapes and forms. They trade in precious metals like gold and silver, but they could also trade in fine art, fine alcohol, like wine and whiskey casks and anything allied.


 Unless you are a commodity trader for a bank or a hedge fund manager, frankly, you should not be trading in commodities. You shouldn't be buying commodities unless of course you are Indian, in which case your family will probably want to invest in gold.  But gold is really insurance at least in the Indian culture. We tend to make jewelry out of gold and have sentimental value attached to it. So, it's more of an insurance rather than an investment.


 I get it, that's a cultural anomaly. But unless you belong to that culture and have that anomaly, chances are that even if you want to have a part of your portfolio in gold or precious metals for diversification, you really need to understand why you are buying that asset class and what it allows you to do.


 Don't just go and put money in art when you are probably not even sure whether that piece of art is a genuine or a fake, whether that wine is genuine or fake.


2. Stock pickers and the day traders.

 The Stock pickers and the day traders will ask you to invest in apple, Tesla Gamestop. Look what happened to GameStop!


 A lot of people lose money in stock trading. Chances are that you will have exactly the same fate. Now, think about this. Banks have entire departments to do the analysis.  But, when you as an individual retail investor try to look at hundreds of stocks, it's extremely difficult to make sense of what is what.


On top of that, you don't really know the dynamics of the market interactions within the market. And even if you had a hundred stocks in your portfolio, it's definitely not as diversified as the S&P500.


In fact, my former colleagues were professional traders who would never put their own money into single stock trading.  They don't trade. They buy and hold. That's the thing, investing should be boring.  I realize you could be missing out on the 20%, 50% spikes, but thankfully, you'll also miss out on the erratic volatility of the markets.


3. The crypto bros.

 The crypto bros will pass a random comment on Twitter, and then Dogecoin will go up and there's extreme volatility.  So, it goes up to a hundred percent, comes down 300%.


Look what happened to FTX! They brought down a couple of banks.


 Now, don't get me wrong, I'm not against cryptocurrencies. In fact, I do think there's a place for cryptocurrencies, especially the blockchain technology that crypto firms offer. However, as an investor, it's very little that we can do to pre-assess our investments.


The average investor doesn't have the skill of understanding the extremely technical white papers written by these cryptocurrency startups, analyze the business and its competitors to actually make a sensible investment decision. Even if one is able to make a sensible decision, since, the cryptocurrency market is not regulated, there's a very high likelihood that something like FTX happens again, and we end up losing our money.


So, if you are someone who is interested in cryptocurrencies, I don't want to deter you from having fun with it. But remember, this is just fun money. This is not your investment. So, in spite of what Naval Ravikant or Elon Musk say about cryptocurrencies, you and I are not Naval Ravikant or Elon Musk. We simply don't have their net worth. You and I have to be a bit more sensible about our investment decisions.


4. The real estate gurus.

 I have a soft corner for real estate because my family's made a lot of money in real estate. And lost a lot of money in real estate. What real estate gurus will tell you is that more millionaires are made in real estate than anywhere else. But what they fail to say is that a lot of money is also lost in real estate.


 For example, when you invest in real estate, you are also putting in time, energy, and money to maintain that piece of land or that house. A lot of times, even people who think they are making money on real estate actually are losing money on real estate without realizing it. But the really interesting thing about real estate is that real estate is one of the safer classes of investments, and you get to have that piece of house or land that you put your money in.


So, if nothing else, you'll have that land. However, what people don't realize is that you have to be really good with not only business analysis, but also analyzing the area geographically of where you are investing and the economic and political risks of where you are investing, especially because real estate is an immovable asset and brings in a very different class of risk to what most people are used to.


The world order is going to change. Change in the world Order is the only constant. That's what economic history tells us.


Certain nations will be the most developed nations for a certain amount of time, and then the economic cycle turns, and other nations become more powerful. We have been seeing a glimpse of this with the BRICS currency coming in, but obviously I don't want to go too much into that because that's a whole different topic.


I don't think that US dollar is going anywhere in the next 50 years. However, hopefully the investment portfolio that you are building, the intention of that is to outlast 50 years, a hundred-year generations. So, when putting together an investment portfolio, especially when it's in real estate, you do need to consider diversification and the economic and political uncertainty that's going on around the world.


5. The business gurus who would sell pyramid schemes and MLMs.

 If a business guru is teaching you how to teach other people how to run a business, that is a red flag, that is probably a pyramid scheme. I will say though that pyramid schemes and MLMs are really good at this mindset training, but the reason pyramid schemes and MLMs don't work is because unless you turn every person on the planet to a customer to sell your agency model, I don't really know how everyone can make money.


My challenge with pyramid schemes and MLMs is that they prey on a certain vulnerable section of the society.


In 2016 I was approached by a couple of men to invest in OneCoin. They positioned it as a cryptocurrency. What OneCoin was in reality was a pyramid scheme.


I realized that it's a pyramid scheme and I bailed out. I had warned these couple of men about this being a potential pyramid scheme. But when you are within that pyramid scheme and with the mindset training that most of these MLMs and pyramid scheme folks are really good at, it's really hard to pull you out of that.


One year later, when one coin was found out to be a scam, those two men lost their entire life's net worth. That is what makes me so angry. They pray on a certain section of the society who really are in desperate need of financial education, and that is who I hope to reach with this post.


So, if any of this resonated, please share it with a friend.

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