Is it a good idea to pay for investment advice? In the past year I've seen a lot of advertisements, e-mails, and blog and forum posts offering investment advice for a fee. With all the free information available online, what kind of advice would be worth paying for?
I am by nature frugal so my view is free beats paid. All the information I've gathered so far has been free: from websites, forum discussions, and old-fashioned phone calls. I understand that not everyone has the time or inclination to do their own research and that some people might be willing to pay for advice.
Here are some things to look out for to make sure you get your money's worth:
Make sure they are who they say they are.
1. Check their licenses and other qualifications.
2. Ask for and cross-check references like employers and clients.
3. Look out for conflicts of interest.
4. Don't be fooled by displays of wealth and success.
The advice should be
1. Useful - you should receive, specific, actionable advice. The advice should not be so vague and general as to be useless.
2. Accurate - there's no point in paying for advice if it can't be trusted to be correct.
3. Legal - stay away from shady deals, insider trading, and anyone who would advise such. It's wrong and just not worth it.
4. Worth the price - this is subjective. Some rules of thumb are that you should make more money from the advice than what you're paying for, and the advice isn't available anywhere else for a lower price.
I'll do a future post about free advice.