6 Popular Financial Tips You Should Absolutely Ignore
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What common financial tips should you absolutely ignore?
Hello and welcome to Friends That Invest. You're joined today by your host Sim. I'm a financial author and investor and I'm here to tell you about all things investing and personal finance. This episode is something I'm very excited to share. I'm going to run through all the good pieces of advice that you have been told over the years that you've learned from social media, from financial advisors, often from your parents, even probably things I may have said in the past. I will put my hand up now and say, I am not above this. And these have been things that widely at the time of listening to them, you go, yeah, that makes sense, but they are bad pieces of advice. And I am here to share them. I'm here to break them down.
And before I do, I just want to say, I have had such a big lunch. I am bursting at the seams. My stomach is out of control right now. And there may be a few cuts in this episode. And the cuts are going to be from me burping nonstop. So just take it with a grain of salt. The idea of salt just actually makes me feel worse. Just take it. It will be okay. We'll work through this. The first mistake that I have made is the idea of cell... at the highest point and buy when the shares are lower. And I remember seeing this advice and just being confused by it because yeah, of course that makes sense. Like you don't sell when prices are low, you sell when they're high and you don't buy back in. But I remember seeing people be like, oh, well, you know, the S&P 500 is dropping.
I'm going to sell now and then it will drop further and I will rebuy at a lower price. Let's say it's like $90 right now. It's not $90, but let's say it's $90 right now and it's dropping. So maybe I'll sell it $90 a share. And if it drops down to like $80 a share, I'll re-buy back in and I'll have more shares for the same amount of cash. And therefore when it goes up, I will go up more. And I just remember like, what kind of boy math is this? And it actually does make sense that you can sell shares as they're dropping and then buy them back as they go further. But you have to be right twice. You have to be right that when you sell down your share, the share continues to drop and And then you have to be right that when you buy back the share, the shares continue to then suddenly start rising.
And the likelihood of timing the market is so, so rare. It is like a pink Kelly bag. Like it just doesn't, I actually don't know if I've ever seen a pink Kelly bag in real life, but then again, I don't actually live in a place where a lot of people have those kinds of bags and saying that it is rare. It is like meeting a man that is emotionally intelligent. It is rare. It is hard to find. Now imagine meeting two emotionally intelligent men. Like imagine having back to back consecutive relationships of two stable, decent human beings. That is like trying to time the market. It doesn't happen. It is really rare. You might get it right once. Maybe boyfriend one was good. Boyfriend two, maybe it was the other way around.
Usually it is the other way around. But what ends up happening is it is bad advice to try and sell your shares when the market is high and then hope that the market will somehow like drop to the bottom and you will rebuy back in and i've actually tried to do this recently and i kind of slapped myself on my own wrist i was like no sim this is bad you attempted to do this on the positive side you might make a quick return and like make quick money on the downside you might actually lose out more so So don't even like bother doing it. So I'll put my hand up and say, I have done this, but I do not recommend it. It's so difficult to be right twice. Now, this leads me to number two, the second popular money tip that you should absolutely ignore, which is that Bitcoin is the main or the best way to hedge against inflation or that Bitcoin is a good way to hedge against inflation.
So just to break things down in really simple terms, Bitcoin, as we know, is a cryptocurrency. It is a investment... vehicle or option or asset that allows you to buy into something that has a certain amount of that asset available.
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