6 Things I Rarely Recommend as a Financial Planner
As a financial planner, people often ask me what they should be doing with their money. Today, I want to talk about the opposite: what are the things I rarely recommend?
Over the years, I've noticed that many financial mistakes don't come from a lack of knowledge. They come from doing things that sound smart but often create unnecessary risk, stress, and complexity. There are exceptions to every rule, and every situation is different, but here are six things I rarely recommend.
1. Trying to Time the Market
This is probably the biggest one. I regularly hear questions like, "Should I wait for the market to drop?" or "Is now a good time to invest?"
The problem with market timing is that it requires you to be right twice: you have to know when to get out, and you have to know when to get back in. Most investors struggle to do either consistently. What usually happens is people sell when they get nervous and get back in once they feel comfortable again. This is often the exact opposite of what leads to long-term success. Instead of trying to predict the market, I prefer focusing on the long term and staying invested.
2. Keeping Too Much Cash
Don't get me wrong, an emergency fund is very important. But I occasionally see people keeping years' worth of savings in cash because they're afraid to invest.
The challenge is that cash loses purchasing power over time due to inflation. It feels safe in the short term, but it can be risky over the long term if your dollars aren't growing. Cash is a great tool for short-term needs, but it's often not the best strategy for long-term wealth building.
3. Buying Investments You Don't Understand
One of my favorite investing rules is simple: if you don't understand how it works, you probably shouldn't be invested in it. I've seen people buy investments because a friend recommended it, they saw it online, or they saw a lot of people excited about it.
Before investing, understand what you're buying, how it makes money, and the risks involved. Simple investments you understand are often better than complicated investments you don't.
4. Chasing the Hottest Investment
Every few years there's a new investment everyone is talking about. A specific stock, a new technology, a trending asset. Suddenly people feel like they're missing out.
The problem is that many investors buy after prices have already risen significantly, simply because they didn't want to be left behind. Successful investing is usually much less exciting than most people think. Most wealth is built through patience, discipline, and consistency. Not chasing the next headline.
5. Taking More Risk Than Necessary
Many investors assume that more risk automatically leads to better outcomes. That's not always true. The goal isn't to achieve the highest possible returns. The goal is to achieve your goals.
If your plan already works, taking on additional risk may not improve your outcome. It may simply create more stress and more volatility. Your investment strategy should match your goals, not someone else's.
6. Treating a Financial Plan Like a One-Time Event
A lot of people think financial planning is something you do once and forget about. But life doesn't work that way. Your income changes, your job changes, your family changes, your goals change, and your priorities change. A financial plan should evolve as your life evolves.
The people who make the most progress financially aren't necessarily the best investors. They're often the ones who consistently monitor and review their plan over time.
The Common Thread
If you've noticed a theme, it's this: I rarely recommend predictions, shortcuts, and unnecessary complexity. Instead, I usually recommend the things that are in your control. Saving and investing regularly, living below your means, staying disciplined during market volatility, and sticking to your plan.
These habits may not be exciting, but they're the ones that tend to work.
If you'd like help creating a financial plan that works for you, feel free to reach out.