How to avoid bad investment advice

Two of the most common investment questions are "what do you invest in " and "what are the best investing strategies"?

The best investing strategies are where you can maximize your return while minimizing the risk.

Bad investing advice can come from many quarters, such as wealth expos or financial advisors. If anyone promises you any type of return over 12%, 99% of the time, they are probably playing you.

There are great financial advisors out there, but many people who sell investment products just want your money. However, it's not that hard to invest for yourself.

1. Never buy a financial or investing product from someone you just met.
2. Getting returns over 12% per year is ridiculously hard. If it sounds too good to be true, it is.
3. If you don't understand it, don't invest in it.
4. If one of your friends recommends an investment that's making them a lot of money, they are probably suckers too. If you see the "results not typical" on any marketing materials, move on.
5. There are no "secrets of the super-wealthy" that anyone will sell you for $500 or that you can take advantage of unless you have hundreds of thousands of dollars.

You do not have to have a lot of money to start investing.

• You could start by investing your spare change with Acorns.
• An inexpensive platform is Ally Invest. You can get started with Stock and ETF trades for $4.95 with no account minimums. Mutual funds are priced on a per trade basis at $9.95.

You've worked very hard for your money. Don't gamble on investments you don't understand, nor listen to pitches unless you solicited them.

There is a huge difference between long-term and short-term investing. Many people don't invest in stocks because they are afraid of losing money in the short term. But, that only affects you if you need money in the short term.

Many people get poor investment returns because they get emotional. Emotions around investing are simply due to a lack of knowledge.

Curb emotions through reading investing books and blogs. Once you realise how investing works, it will help take the emotion out of it.

Three essentials for successful investing: Invest in things you understand with low fees and minimal taxes.

Taxes can take a massive chunk of your investments' future earnings, so minimize their impact as much as possible. With long-term investments, first max out your 401k, Roth IRA, and SEP-IRA, since they offer a tax benefit either when you deposit or withdraw the money.

After you maxed out your 401k, Roth IRA, and SEP-IRA, invest the rest in the following:

• 70% in index funds. They are low-tax since minimal trading is done within them.
• 20% in individual equities that you plan to hold for the long haul like Amazon, Apple, and Facebook. Invest in companies you use and believe in.
• 5% in physical real estate and REITs.
• 5% in non-traditional investments, like domains and art.

These percentages can fluctuate during the year, depending on the value of the individual equities. As you make more money, diversification becomes more important.

For short-term investing, keep your money in a bond fund like the Vanguard Total Bond Market Index Fund or a certificate of deposit (DC) at your local bank.

If you are willing to take on a bit more risk, put your money in a balanced index fund like the Vanguard Wellesley Income Fund, which invests in about 60% bonds and 40% stocks to generate a higher return with a slightly higher risk.