Anyone who would like to build wealth for the future will almost certainly go straight to an investment or retirement advisor for help. That’s a very smart move, but there is an even smarter move everyone should make even before that. There are many specific reasons why financial literacy is right for you and why teaching yourself about economics is always a good idea. Here are a few of them.
Invest in Yourself
There is no greater investment you can make in your well-being than to give yourself a strong financial education, especially when it comes to money borrowing. Becoming financially literate means you are much less likely to be taken advantage of by a financial adviser who may not be working with your best interests at heart. While most financial advisors and planners tend to be legitimate, how can you know that the investments they are making are the best ones for you if you don’t have at least a basic understanding of what they’re doing on your behalf?
There are a great many advantages to teaching yourself how to be financially literate, and only a single disadvantage, which is time and effort. However, that will provide you with the knowledge you need to increase your wealth and prepare for your future.
A Lot of Investment Advice is Given From the Wrong Perspective
Too often, financial advisers give advice based less on their financial education and more on their experience, which may or may not be relevant to you. If one expert tells you to diversify your portfolio to reduce your exposure to risk and another tells you such diversification is much riskier, how can you know what to do, if you have no idea what “diversification” means to you?
What if one expert tells you that the stock market is the best way to invest, while another tells you to buy gold and recommends real estate? How will you make a decision, unless you know something about both? Everyone who claims authority believes they know the right answer to every situation, but they can’t all be right. Besides, you are an individual, with individual needs and wants. The solutions to creating wealth for you are very complex and personal. That’s why you should learn the basics so that you can listen to everyone and make your own decisions about your finances.
No Single Approach to Investment
Despite what some investment professionals – especially those who sell a lot of books and charge thousands of dollars for seminars – believe, there is no single approach to investment that fits every single person and situation. There is no magical strategy that will bring you rich; the key is to educate yourself on the fundamentals.
There are many ways to invest in a plan that brings you profit and greater wealth, and there are quite literally millions of sources for the information, so if you’re uneasy about spending hundreds or thousands of dollars on a seminar or lesson from an expert, you should know you can usually find plenty of books. The only thing you can’t get from books or experts is the key to financial security that works specifically for you. This is why an investment in financial education is so important; only you can decide which types of investment are right for you.
The More You Know, The More You Learn
One of the first lessons you will learn in your financial intelligence quest will be about the importance of compound interest. And your financial intelligence should grow at least as fast as the value of your investment portfolio. That is because a lack of knowledge can act as a limit on your growth potential. With proper financial education, you will have the information necessary to decide which investment strategies make the most sense for you. The more you know, the more choices you will have when it comes time to make decisions regarding the best investments for you.
The more financial intelligence you have, the farther you can go, while those with less financial savvy can’t go nearly as far. Financially irresponsible person lives exceeding his means, so one should try to avoid irresponsible financial actions. Of course, you should have an advisor, but as noted previously, an advisor can only go so far when you don’t know what you hope to accomplish with your wealth plan or your retirement plan. Knowledge translates to saving money in your pocket.
Financial Freedom and Independence Is Reliant on Financial Intelligence
It is certainly a great idea to hire an investment advisor to help you make investment decisions, but if you want real financial freedom, you will never have that as long as someone else is managing your money and making investment decisions for you. A good investment advisor should be like a good lawyer; both should be there to provide you with the best possible instruction so you can make the best decision for you.
Your Financial Future
The bottom line is, you shouldn’t rely on others to make your financial decisions for you, which means you have to develop a significant amount of financial intelligence if you are to be successful in preparing a secure financial future. Your life belongs to you. Advisors’ and counselors’ purpose is to explain what each of your options could mean to you. Ultimately, every decision having to do with your life is yours to make. And you can’t possibly take the advice they give you if you don’t understand that advice. That means having a basic level of financial intelligence so that you can understand what they’re trying to tell you.
It takes a long time to develop a working knowledge of how finances and economics work, so get started now. Listen to some financially-based podcasts. The more you hear the terms, the easier it will be to understand your financial advisor’s counsel.References and Sources
1. Simple Ways to Educate Yourself About Personal Finance. Retrieved from https://www.internetvibes.net/2018/03/12/simple-ways-to-educate-yourself-about-personal-finance-3/
2. 7 Key Reasons Why Financial Education Is Your Best Investment. Retrieved from https://financialmentor.com/financial-advice/financial-education-best-investment/13173
3. How to Become a Self-taught Finance Expert. Retrieved from https://www.investopedia.com/articles/basics/11/become-self-taught-finance-expert.asp