I recently made a small fortune. For me. It wasn’t a fortune or even a lot of money. But I achieved money in a way that I never thought. What’s my secret? It all began when I met a Guyanese man in College.
This Guyanese man was the former head of Citibank in Jamaica. He was the finance professor of my college. In full disclosure, I wasn’t an economics major. I knew nothing about business or economics at all. I naively assumed that the loans I was taking out would magically be paid back with my full-time job right out of college. I graduated in 2008. Things didn’t work out that way.
But I always liked to challenge myself and felt that I should give finance a try. When Rex met me on the first day of class, he asked me what my major was. When I told him, he laughed. And laughed. And laughed. He thought it would be IMPOSSIBLE for me to pass, let alone do well. Underestimation being a natural motivational trigger for me, I set out to prove him as wrong as possible.
The fact was, I wasn’t great at finance. I tried and studied, but it didn’t click in three months. But, it did give me valuable time with a person who explained a few basic points. Even though I wasn’t going to get an excellent grade, he filled me in on a few tips when it comes to investing:
You will learn finance because you will have to learn for your entire life. Becoming rich won’t motivate you, living comfortably in retirement will.
401(k), IRA, SEP, tax-loss harvesting and capital gains taxes are all familiar topics when it comes to retirement.
There are lots of different types of investments which the FINRA Foundation’s page can help you. Have a 401(k)? This page can help you understand what it all means. Use it and bookmark it when you have a question that needs answering later. And while there are many different types of investments, Mutual funds are popular because they allow you to diversify your investments. Click here to learn more. Exclusive to Patchogue-Medford Library Cardholders, we have access to Morningstar, which includes the excellent section on Help and Education. If you’re just learning how to understand investing, this is a great place to begin. You can also visit our Financial Literacy FAQ’s or our Financial Literacy Topic Guide. For an introduction to stocks and bonds, Khan Academy provides a free course guide on Stocks and Bonds. And Coursera has a list of classes from major universities on Finance and Business.
Want to test yourself? Try FINRA’s Investor Knowledge Quiz
By learning more, you won’t be swayed by what others think are a ‘sure-fire’ bet. In fact, finance is not betting.
What’s right for one person may not be good for the other. Are you more conservative or risk-taking?
By knowing yourself, you can make financial decisions that work for you.
The American Institute of CPA’s can go into more depth on how aggressive you should be, it would be wise to take a short survey on your risk tolerance. Rutger’s University has an Investment Risk Tolerance Quiz that can start you off. Yahoo Finance also has a quiz you could take and CNN Money does as well.
Immersing yourself in financial information doesn’t have to be time-consuming or expensive. The library has numerous current resources like magazines and newspapers related to finance like the Financial Times, Money Magazine, Kiplinger’s, and the Wall Street Journal. Within the library, we carry copies of Barrons, WSJ, Financial Times, Money magazine, and Personal Finance.
By knowing more about finance, you can avoid people who seemingly mean well but are wrong or are at worst, scammers.
The person you see all the time at the church. The person you always talk to for advice on different topics. The company that is about to go big but needs some money to get off the ground. Even your financial advisor may not have operated in your best interest.
The Department of Labor has recently changed rules about financial advisors. Also, be savvy when it comes to avoiding scams. Visit the website Save & Invest to protect your investment and outsmart investment fraud. The FTC has a page that can tell you what steps to take in case you’re a victim of identity theft. And the FINRA Foundation has a page on topics related to protecting your money from things like Pump and Dump schemes and Ponzi schemes.