I know I was just as ignorant of stocks and investing in general in the past as your friend, but have you considered educating her? I, for one, would have been extremely grateful to be taught something new!

“I knew I couldn’t get her to understand that at the age of 27..” - why not?

And
“But if you know it’s a bad idea, should you tell them not to do it? Hmmm…”, again, why not?

I guess where I’m coming from is that, having had to learn some things the hard way, I’m up for learning with/teaching my friends. (In fact, I’ll be spending a day or 2 this weekend doing a lot reading with a friend and discussing our strategies).

Looking forward to your reply!

Plouffey, that’s strange that someone got mad at you for that. I could see someone disagreeing with you about it, but why do you think they got mad? I think ARMs are usually a better deal than fixed rate mortgages, but anytime you can only afford a property with a certain type of mortgage, that’s a sign that it’s way too expensive. Glad to hear you didn’t overextend yourself.

Now, I have no debt, an emergency fund, and a nice 401(k) going. Meanwhile, she is upsidedown on two properties and will probably lose everything.

@ Moneymonk, all the time I hear people talking about stocks being risky, but I think these people have never owned or even researched any stocks themselves. Someone hears about Enron, and that puts a stigma on the entire asset class of stocks.

That’s where you get proxy advice from friends based upon hearsay and rumour. And hearsay and rumour from non-experts very easily enters the community knowledge-base without any expert filtering.

It becomes true because it’s feasibly credible. For example, and you still hear this today, “the taxman paid for my shiny new car outside”.

It’s nonsense. The deductions you have to take on a personal taxation level, completely counteract any write-down benefits the company receives. What’s giveth is taken away elsehwhere.

But it’s a great boast down the pub to your mates. Completely without foundation though.

Great article and advice to beware of giving advice in areas you don’t understand. And to be wary of the source of the advice and who is giving it.

I get calls from clients asking advice on IT. Being such a wide field from PCs to programming, from web-sites to blogs etc, you cannot be all things to all people. We do one ot two things very well and can rightly claim to be expert. But there is a line.

So it may be useful to have a list of experts you can refer people to if you expect to be asked about areas you cannot properly give advice on.

LOL

a classic one. Being in the PF culture, I have heard it all.

THAT’S the best advice you could ever give! I try to make it a habit to only heed the advice of people who have done what I want to accomplish. Experience trumps all in my book. Sometimes experience is negative, as in “Don’t do what I did.” But it is still experience nonetheless.

Another thing I ask when receiving advice is, “Are you doing this? How’s it going?” If someone won’t even follow their own advice, it’s best to just change the subject!