Setting up an investment profile is one of the most important steps to achieving financial maturity. Done correctly, it can be a great way to grow your wealth without just working a job to get money. But investing is also one of the least understood parts of financial management.
Many people just hire a financial adviser to manage their investments and then forget about them until they pay out. After all, who has time to learn about bear markets and bull markets and all that?
But it’s important that you get passionate about investor education; read on to learn why.
Know When You’re Being Lied To
Being proactive about investor education has many of the same benefits as being proactive about learning about your healthcare. When you go in to see your doctor, it’s good to know about the problems they’re treating and to ask questions. Having all the information ensures that you get the best treatment plan for you.
As an investor, you don’t want to blindly trust the financial adviser you’re working with. Their job is to sell you investment profiles, so they may give you half-truths. The more you know about investing, the more you’ll be able to keep them accountable and make sure you get the best plan for you.
Find the Best Option for Your Investing
Speaking of the best plan for you, being educated about investing can help you find the right option for your investing. Investments aren’t a one-size-fits-all kind of deal; there’s a different right solution for everyone. But for financial advisers, it may be easy to recommend a cookie cutter plan that doesn’t get the best possible results.
You know your own investing needs best, and with the right education, you can find the best plan to fit those needs. Working with a financial adviser can help provide a different viewpoint, but you should keep one hand on the steering wheel. Making sure you’re well-educated on investing can help you find the best plan to reap maximum profits.
Take Responsibility for Your Own Investments
The truth of the matter is even if you hire the best financial adviser in the world, you will still be responsible for your financial decisions. Think about it; let’s say you put all authority over your investments in your adviser’s hands and all your stocks crash. Your adviser won’t be out all that much money, but you will be.
So if you’re going to be responsible for what happens to your money either way, isn’t it better to be well-informed? Staying ignorant is like getting pregnant and refusing to learn how to change a diaper. One day soon, you’re going to find yourself in a crappy situation.
Grow Your Knowledge While You Grow Your Money
So let’s paint a best-case scenario of how your investing might go. Your financial adviser picks some brilliant investments, and your profile soars. You invest in the next Apple, and suddenly you find yourself in possession of a fortune because of your investment profile.
But now what? You have all this money, but how do you manage it well so you make sure you stay wealthy?
You want to make sure your financial savvy grows at the same time your wealth does. That way when your investments pay off, you know what to do with all that money. And no, hiring more financial advisers is not the answer in that scenario.
Gain Permanent Benefits
The truth of investing is that it’s a gamble. Some investments will pay off well, and sometimes, you’ll lose money. That’s the name of the game, and there’s a chance that something disastrous could happen and you could lose all your money.
But if you’ve put in the effort for investor education, that’s a profit you won’t lose. Even if the economy were to go into a 1929-level crash, you’ll still have the financial savvy you gained. That is one investment you will never lose out on, and it’s good to have investments like that.
Avoid Conflicts of Interest
While financial advisers are paid to keep your best interests in mind, no one is 100 percent impartial. A financial adviser may be partial to one approach or plan over another, and that may not be the best solution for you. The only way to avoid any conflict of interest is to make sure you take interest in your investments.
You are the only person who has your financial well-being as their top priority. It’s important that you learn as much as you can about investing. Otherwise, your money may be going to serve someone else’s interests.
We’re going to get a little esoteric here, but bear with us. What is the point of having money? Why do we spend all this time and effort working jobs and setting up investment profiles and contributing to savings accounts?
While some of you may be saying “So we can have Lamborghinis,” that isn’t the real reason (though it is a pretty sweet perk). The real reason we work to have money is to gain independence. Money allows us to control where and how we live and, if we get enough of it, what we do with our time.
So in the pursuit of getting money, why wouldn’t you work to keep that independence? Refusing to become financially literate is willingly surrendering control to another person. And that defeats the whole point of investing in the first place.
And, of course, another goal of having money is to live a happier life. We all know the old saying “Money can’t buy happiness,” but let’s be real. It’s nicer to cry in a beautiful house with food in the pantry and all the bills paid than in a sucky studio apartment.
Turns out knowing more about your investments can actually help you live a happier life all on its own. Even if your profile isn’t flourishing at the moment, there’s a study that says that people who are more informed about their investments feel more in control and stress less about their finances. Long story short, knowing what’s happening with your investments makes you happier!
Learn More About Investor Education
Learning about what’s happening with your finances is a crucial part of being an investor. Before you start investing any money, spend some time brushing up on investor education. We promise you’ll see the dividends.
If you’d like to learn more about financial savvy, check out the rest of our site at Cheap Like Me. We have a ton of articles that will help you step up your financial game. Check out our article about how to invest your money to get started on your investing education!