It Depends

Money is generally a taboo subject, so most avoid talking about it. Although, I’ve found that working in the financial services industry seems to make people feel more comfortable talking with me about their finances — which I think is great because I love to hear about people’s financial situations, struggles, and questions.

But I dread the look of disappointment that I often see when I have to answer a question with an underwhelming “I don’t know” or “it depends.”

I realize “it depends” is not the specific help or advice that people want to hear. But it’s the truth. Money decisions are rarely black and white and there are few hard and fast rules of thumb that can be applied to any situation.

That first answer of “I don't know” is my default response for any stock market trend or specific stock question. Again, this is the truth. Markets are unpredictable in the short-term and individual stocks even more so. I know that people expect me to have an opinion, and I generally do, but giving casual investment advice is tricky.

Typically people won’t remember what was said, they’ll only remember what happens. I could guess at what I think will happen, but if my guess is wrong they won’t forget it. And if my guess was right, they’re likely to forget. Most lessons about the stock market can’t be taught, only learned through experience.

The other, equally underwhelming, answer of “it depends” applies to most other broad financial questions. The longer version of that answer is “it depends on multiple factors that are probably too nuanced to cover in a short five-minute conversation.”

The answer to “Should I contribute to a Roth IRA?” depends on who you are.

How much money are you making? How much are you saving? How much can you save? Do you have any upcoming major purchases? What other investment accounts are you contributing to? What’s your investment philosophy? What tax bracket are you in? What is your time horizon? When would you like to retire?

Personal finance questions are personal. Adequate answers require quite a bit of background information on one’s circumstances. The same question can have many different answers depending on the situation of the person asking.

Now, I don’t want to discourage anyone who’s reading this from asking me, or anyone else, financial questions. I love to talk about money. I’m pretty sure I enjoy discussing money questions more than the person who is asking. And I try my best to give good answers. My overall point is to illustrate that general or casual financial advice isn’t very useful.

The problem with general financial advice is just that, it’s general.

A financial TV show, podcast, or blog (including this one) doesn’t know who you are, what your goals are, or your ideal lifestyle. Any general recommendation or advice given should be filtered through your own personal circumstance to see if it’s actually beneficial for you or not.

You have to get to know people to offer useful financial advice. You have to understand their unique needs, goals, desires, and pain points. Process and philosophy can be universal, but how it’s applied is personal.

It seems like random people giving financial advice is becoming more common on social media. Apparently, FinTok (financial advice on TikTok) is now a thing. There’s never been more generic, and honestly bad, advice out there. So, keep in mind that what may have worked for them, or what they say worked for them, may not work for you. There’s no “one true way to wealth.”

We’re all different. We start at different places, are heading in different directions, and get there in different ways. Because of that, the honest answer to pretty much any financial question is, “It depends.”

Thanks for reading!