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3 Reasons to Ignore One-Size-Fits-All Investment Advice

There’s a lot of investment advice out there, and most of it is designed to be blanket advice to every person looking to put their money into the stock exchange. The trouble with that advice is that every investor is different, and one-size-fits-all advice is not going to work for everyone. It may help a few people find exceptional success. But for others, it will lead to exceptional failure.

Here are 3 reasons that generic investment tips cannot be trusted, and how you can tailor your investing decisions to your personal situation, background, and goals.

Everyone Has Different Goals

This is the biggest reason that blanket investment advice doesn’t work. While one person may want to make large sums of money quickly in the stock market, others are satisfied with slow, incremental growth over time. Hot tips about stocks that are expected to skyrocket may work great for the former type of investor, but for the latter, it could be a huge risk that they’re not willing to take.

One of the best ways to tailor your investments to suit your personal goals is to diversify your portfolio in just the right way. Stocks are higher-risk assets, while bonds are lower risk but yield lower returns. There is no “perfect” balance of stocks and bonds; it is all subject to your personal goals and tolerance for risk. So tailor it to your needs, or work with a professional who can handle balancing those investments for you.

Everyone Has an Expertise

Too many people assume that you have to be an expert at finances to make smart investments, but that’s not necessarily true. While you should learn all you can about investing if you’re going to play in the stock market, you can use your existing skillset to help guide your investment decisions. This is yet another reason why generic investing advice is ineffective.

Let’s say, for example, that you’re extremely knowledgeable about the technology industry. You know all the latest players in the field, and you know about up-and-coming tech before most people do. This can help you to make smart investments in the tech stocks, when someone else would just be making guesses. So customize your investments based on what you’re good at, and let your expertise guide your decisions.

As multi-millionaire and investing guru Tai Lopez puts it: “Find one thing in your circle of competence and focus on making it your specialty. Remember this: if you try to be good at everything you will be good at nothing.”

Everything Changes

An investment strategy that works for you now may not work so well in the future. Your tolerance for risk may change, or your financial situation may affect your ability to make more investments. Plus, the stock market itself is in constant flux, and that hot tip you heard about can go cold very quickly. Every stock behaves differently, so blanket advice like “stick it out until the price goes up again” or “get out now and cut your losses” should be taken with a grain of salt.

You need to periodically re-assess and adjust your investment strategy to fit changes in your personal life as well as changes in the marketplace, and you can’t let the generic advice you keep hearing influence those decisions. Your situation is unique, so the way that you need to reallocate your assets will be unique as well.

While there is some value in the one-size-fits-all advice that’s out there, it’s best to think of it as a nice suit. Straight off the rack, it might work for some people, but it’s always better to get it tailored to your exact measurements. If you tailor that generic investment advice to your specific needs, you can make investment decisions that are better suited to your unique situation.