How to evaluate investment advice: A beginner’s guide

The first step is simple: Who’s talking?
Are they a registered financial advisor? An analyst at a big bank? A day trader with a massive following? A retired teacher who blogs about dividends?

Credentials aren’t everything — but they do tell you something. People who work in regulated industries have rules to follow. They can still be wrong, of course, but there’s oversight. Contrast that with “some guy on YouTube” who calls himself a crypto millionaire but won’t share a last name.

Rule of thumb: If someone gives you advice, you should be able to Google them and figure out what qualifies them to speak.

This is the filter that can tell you a lot: What do they stand to gain from you believing them?

• If they’re selling a course, they benefit if you think they’ve cracked the code
• If they’re pumping a stock, they might already own it
• If they’re pitching a new trading app, they might earn referral bonuses
• If they’re trying to get views — and just views — they may not care what you do at all

This doesn’t mean everyone with something to sell is untrustworthy. But it does mean you should pay attention to incentives. Someone with a conflict of interest may still offer useful insights — just don’t turn your brain off while listening.

Oddly enough, tone can tell you a lot. Here are a few vibes to be wary of:

1. Urgency overload
   “This opportunity won’t last. You have to act now.”
   Real investing rarely requires speed. Anyone pushing urgency is trying to bypass your critical thinking.
2. One-size-fits-all
   “Everyone should be doing this right now.”
   Real advisors ask questions before giving answers. Your risk tolerance, time horizon, and financial goals matter.
3. Insulting the competition
   “Only idiots invest in ETFs.”
   Beware of anyone who builds credibility by tearing others down. Smart investors can disagree without being smug.
4. Overconfident predictions
   “This stock is a guaranteed 10x.”
   Let’s be clear: nothing in investing is guaranteed. Not even your principal in some cases.

Here’s where it gets tricky. One of the classic red flags is a promised return that’s “too good to be true.” But what does that actually mean?

If someone tells you they earned 8% in the stock market last year — that’s reasonable. If they say they made 25%, you might raise an eyebrow. But here’s the catch: In some years, that 25% return might be real. And for a stretch of time, it might even be repeatable.

The real red flag isn’t the number — it’s how they talk about it.

Do they explain how the return was generated? Over what time frame? With what risks? Are they clear about what went wrong when it didn’t work?

If someone says, “I doubled my money” — your follow-up should be: “And how often have you done that? What did it take? What could’ve gone wrong?”

A trustworthy voice welcomes those questions. An untrustworthy one avoids them.

This one’s subtle but powerful. Pay attention to whether the person volunteers the downsides. Do they tell you upfront what could go wrong — or do you have to drag it out of them?

People who give real financial advice — not just sales pitches — tend to lead with the risks. They walk you through the scenarios that don’t go as planned. And they do it in plain language.

If someone glosses over the risk — or worse, acts like there’s no risk — that’s a problem.

Sometimes, it’s not that the risks are hidden — it’s that they’re dismissed. Watch for a tone of “If that happens, we’ll have bigger things to worry about.” It sounds logical in the moment. But this kind of shrug-it-off thinking could be dangerous. It doesn’t help you manage risk — it helps the speaker avoid responsibility.

In some cases, the expert isn’t trying to deceive you — they’re just not facing the risks themselves. Think back to Long-Term Capital Management: a hedge fund full of Nobel laureates, undone by risks they modeled but underestimated. Denial doesn’t always look like denial. Sometimes it looks like confidence backed by credentials.

The lesson? Even smart, well-meaning people can fall in love with their own strategy. You want to learn from voices who interrogate their ideas — not just promote them.