“Sometimes it’s the smallest decisions that can change your life forever.” – Keri Russell
When showing return on investment, it’s rather easy for financial salesmen to select returns that communicate the point the salesperson would like to make. It’s all in the selection of the return and time period, as well as in the presentation and implied perception.
When evaluating a potential investment opportunity, it is sometimes easy for investors to get fooled by the numbers. This is because financial advisors and product salesmen know how to pull out a subset of data when they want to make a particular point. Although there are ethical requirements, especially for CERTIFIED FINANCIAL PLANNERS™, or CFPs, not everyone is as driven by the idea of doing what is right for the client – even though most everyone says they are. So how can you protect yourself – and your money – without seeming like a Doubting Thomas or getting stuck in indecision? Be an informed consumer.
Remember the old saying “caveat emptor” or buyer beware? Just like with anything else, be sure to do your research before buying into any type of investment. If you were going to purchase a new TV or computer, you would likely do some research, so why is it that so many people blindly take questionable advice when investing many times more money?
It is rather easy to do just a quick amount of research on an investment idea that is being presented to you. By going online, you are likely to find different sides of the story – not just the one in the glossy sales brochure. While perception can be turned in nearly any direction, be sure to consider the data that will tell the real story about how the investment has performed over time and the risks you would be assuming. And of course, it is always good to keep in mind that past performance is not necessarily an indication of future results.