Note: The media is not always your friend.

It’s quite common to come across people who think they know how to manage their investments. And the fact is, some people do a very good job of it. But experience shows that competent do-it-yourself (DIY) investors are in a minority compared to the masses getting “hot tips” from friends, family and “media experts.” Ultimately, these tips often wind up costing novice investors dearly. In no particular order, here are three common mistakes DIY investors make that could wind up costing money:

1) I was watching a finance expert on TV and she said…

Many of the people doling out investment information in the media are not professional investment managers. Following the media’s “free” advice could ultimately wind up being very expensive. Discerning investors realize this and understand the value a professional advisor provides. Why else would the endowment funds of Harvard, Yale, and Princeton spend millions every year for professional financial advice? If hiring financial pros didn’t make sense, these billion-dollar funds would stop doing it. And, while hiring a seasoned pro doesn’t necessarily guarantee outstanding results, it’s something for the DIY investor to seriously think about.

2) I don’t need a financial advisor because I read investment periodicals and Web sites.

This is related to the first mistake, but with a twist. Knowledgeable professional financial advisors seek long-term relationships with their clients and meet with them regularly to review and update accounts based on the unique needs of the client. Compare that approach to a DIY investor reading a story that appeared on a cable news network’s Web site back in November of 2007 that stated that tech stocks should lead the rebound and that leaders in the technology sector are growing fast and weren’t hurt by subprime issues or soaring oil prices.

Remember, this was November of 2007. This “advice” went on to recommend a variety of investments including one which, according the writer, was selling for a little over $28 per share at the time. Fast-forward about 16 months and the same investment was trading for a little over $13 per share. What’s the dear reader to do? You can be sure the author of that column wasn’t taking calls from readers asking for further advice after losing over half of their money based on one of his suggestions.

3) I can save money by doing it myself.

Remember the old saying, “Penny wise and pound foolish?” Do-it-yourself investors often have difficulty understanding the difference between price and value. Many media outlets have done a good job of convincing consumers that they are foolish to pay for financial advice since it can be easily obtained for free or very cheaply. In the late 1990s, during the dot.com bubble, a television commercial was airing that showed a distinguished sixtysomething man cooking dinner for his wife. In between stirring his gravy and checking on the pot roast, he would dance over to his laptop for stock tips and quickly execute buy and sell orders for only $7.95 per trade! Of course, hiring a professional financial advisor doesn’t guarantee investment success. Financial advisors make mistakes, too. But, a disciplined, serious approach to investing with a seasoned professional may yield better results over time than focusing on how little it costs to make trades in the portfolio.

In short, investors need to recognize that there is a cost to any kind of advice. Free media advice that winds up losing people half of their investment may not be such a good deal. And, while it may be fun to pretend that media resources are practically free, the cold, hard fact is that the media’s interests are not necessarily aligned with their readers or viewers. Engaging a professional financial advisor may not guarantee investment success, but professional fees could wind up being much less expensive in the long run compared to “free” advice from the media.

Mark Kennedy is the president and founder of Kennedy Wealth Management, LLC, a registered investment advisory firm located in Calabasas. Mark has been helping retirees and pre-retirees for the past 17 years and has been featured in interviews on ABC television, CBS Radio, Fox Business, Smart Money Magazine online, Bankrate.com, The Daily News and The Los Angeles Times. Mark has also written for several publications and has hosted his own radio program on KRLA AM 870. He has taught thousands of people how to protect and preserve their assets, increase their retirement income and reduce their taxes. For more information call (888) 805-1541 or click on www.kennedywealthmgmt.com .