Parents and other older relatives may mean well, but the financial advice they offer may not be suited to you or your lifestyle. Your Parents’ Financial Advice is Probably Wrong (for you) breaks down some reasons why this is so. This kind of information can be helpful for both sides: parents needs to know that their adult children aren’t being rebellious if they don’t follow parental investment advice and adult children need to know it is okay to not follow advice that doesn’t fit, even if it comes from your nearest and dearest.
Your parents may not fully comprehend your lifestyle or the financial outlook for someone your age or in your profession. If your parents think you are foolish for not buying a house and that renting is a “waste,” they may not recognize that investing in a house before you are ready for ownership can cause issues later. If you think your career may require you to move around, you may not want to buy a house before you think you can stay in it for a while.
The article offers the story of a woman who invested in a mutual fund that her father recommended; years later she realized that this fund grew too slowly for someone her age who had time to deal with the market’s volatility. That woman is now a financial planner and now sees this was a misstep.
Your parent’s biases—whether they want you to invest as they do or not invest at all or to avoid certain kinds of investments—can influence you too heavily if you don’t do your own research. They may not mean you any harm; they just aren’t aware that your financial outlook may be very different from theirs.
As the article states, “Even if your parents are financially adept, it pays to craft your own financial plan.” And if you are young, you have time to correct any missteps.
A Fee-Only financial advisor can help you chart your own course and they do not receive commissions when they get clients to choose certain products.