Investing...or speculating?

A friend of mine asked me a few days ago if it was time to buy the dollar.

At first, I was hesitant to answer. How do you give financial advice to a friend without sounding like a know-it-all?

I just gave a straight and honest question -

Why are you buying the dollar?

No words were uttered.

I broke the silence by asking the person a few more hard-nosed questions -

Are you using the dollar for something? e.g. going abroad, paying for something, among others.

Then I further told the person that if there is no need to use the dollar, why bother buying the dollar? I said that there are a lot of peso investments out there like mutual funds and unit investment trust funds, the stock market, bonds, etc.

Then I was greeted by the million dollar (or peso) cliche -

The person had a friend who bought dollars before, and then kept it for a long time, and "is doing well now."

For a moment there I felt like the words were taken from my mouth.

Flashback to a few nights ago, I was watching the Suzie Orman show. There was a caller who was asking if she should take the advice of her good neighbor who happens to also be a financial advisor. The neighbor was suggesting that she take some big investments in a fund (or some such).

Suzie Orman then probed further, how many years has her neighbor been a financial advisor? The caller said that it's been about 2 years. Obviously Suzie was not in favor. In fact, she went into hysterics.

The friend asking me was experiencing the same dilemma.

Just because a friend has the best intentions mean that they are giving you the best recommendations.

To be continued...