Have you ever gotten a bad piece of financial advice? You’re not alone. We’ve all had a “helpful” friend or relative that’s given us a pointer in the wrong direction. The good news about bad advice is that we can still learn from it - we can learn what not to do.

It’s time for Part 2 of our series about “The Worst Financial Advice You’ve Ever Received.” With each article in the series, we’ll share the bad advice you can get, the surprising and sometimes funny examples others have run into, and ultimately what you should focus on instead.

This time around, we’ve got one that we’ve all heard at some point or another

Bad Advice: “I’ve Got a Hot Investing Tip For You...”

One of the most common pieces of bad financial advice is someone giving you a tip about a “promising investment”. No investment is a sure thing though, so take any advice with a grain of salt.

Whether it’s buying or selling, you can get burned pretty easily.

Mark from The Retirement Spot was convinced to invest $5,000 in Enron back before it went bankrupt. G. Ruga of Paying for Private School was talked into selling out of Amazon back in 2001 (priced about $10 a share, now worth about $1800 a share). Michael Dinich was advised to sell his Marvel stock, back before it got bought out by Disney and surged in value.

Others may point you to alternative investments.

Savvy New Canadian paid $20,000 toward a “trader’s academy” to learn how to trade in stock futures and foreign exchange. It took him two years of trading away all of his savings and earnings to realize he was on the wrong path.

Method To Your Money was advised to buy the Iraqi Dinar in 2007, thinking that the currency was set to rebound and his investment is all but worthless. His advice? "If you do invest in something speculative, you just put in money you’re OK with losing. Count that money as being dead to you and if you make something off of it, it’s a bonus."

Your uncle or college roommate may portray themselves as an investing expert with an eye for “great deals”, but most likely, they aren’t performing as well as the experts.

And even the experts aren’t that good at it.

In fact, only about 1 in 20 mutual fund managers were able to beat the stock market index in their investment area. Think about that for a minute; these are experts whose full-time job is to invest and make money.

So, if even the experts aren’t that great, what strategy should you follow?

Good Advice: “Boring Investing Is the Best Investing”

If there’s one person that’s probably worth listening to when it comes to investing, it’d be Warren Buffet, who’s got a great track record of picking his own investments.

There are three basic principles in investing that Warren Buffet’s advice for you and I focus on:

Buy and hold - The fees for buying and selling investments can take a bite out of your returns. Don’t try to time the market. Buy and hold your investments for the long haul.

Diversification - Don’t put all your eggs in one basket. Investing in lots of different companies in lots of industries minimizes your risk while keeping your return potential high.

Minimize Fees - Don’t pay a lot for someone to manage your money. Even 1% fees on an investment can take a big portion out of your returns.

How does this distill down to a strategy? His advice to others is simple - invest in index funds and hold them for the long haul.

It may not be a flashy or exciting strategy, but historically, it has been a very effective one.

It can be tempting to try your hand at day-trading or picking the next Silicon Valley unicorn, but heed this anecdote from John from ESI Money:

"I was fresh out of grad school, had a great job paying good money, and all of a sudden I thought I was a Wall Street expert. My friends were just as bad and we always traded stock tips, most of which lost very large percentages of the initial investment.

It wasn’t really losing the money that was the worst part. No, that was the fact that I lost five years of investment time when I could have been putting a ton of money in index funds!"

Key takeaway: keep your investing boring!