The best advice on giving advice I ever read was back in 2009 on a forum called “Bogleheads.” That’s where fans of John C. Bogle, founder of the Vanguard Group, gather to discuss their views on investing and personal finance.
Here was the dilemma: The father of a 38-year-old was concerned that his son was selling out of the stock market at an inopportune time to invest in a variable annuity.
Every situation is different, of course, but variable annuities are complex, expensive, and generally not what I (or many of the forum participants) view as the best investment vehicle for someone with decades left until retirement.
Throughout the discussion, you could tell that the father was deeply concerned about his son’s financial future, but couldn’t really intervene.
Then a wise sage named “Nisiprius” chimed in:
Another thing to keep in mind—especially in situations where someone else is doing something suboptimal:
If someone you care about is investing in something seriously unsuitable—like putting half their nest egg into an individual REIT or going partners in a local restaurant with no experience running a small business—then one might consider intervening.
If someone you care about is investing in something reasonably sensible and reasonably suitable—just mediocre and overpriced and fee-ridden—that's not the end of the world.
As Nisiprius pointed out:
It’s not what I'd choose, not what you'd choose, not the best choice, but not by any means terrible. It's like buying an overpriced car — as distinct from buying an unsafe car.
I couldn’t have said it better myself.
Lesson? If someone you care about is doing something “suboptimal,” but not exceedingly dangerous, make your point, show you care, but don’t dwell on it.
If someone’s making a seriously unsuitable choice, it’s then that you consider taking more action. Keeping peace among your friends and family requires that you know when to intervene and when to keep your mouth shut.
Thanks “Nisiprius,” whoever you are, wherever you are. That’s great advice on giving advice.