Over the course of the last 6years (that I seriously explore and use financial tools), I realized some differences that financially educated (For convenience, "FE") and uneducated ("FU" no pun intended) parents pass on to their kids. I'll bet that's where many of us got our first financial guidance from. If one's parents was financially educated, they would pass on sound knowledge. Vice versa. So, how financially smart are your parents? Should you be unlearning some of the wrong stuff and open to new ones?
Some real-life examples I came across:
FU teaches: "Don't trust other people with your money. Or trust only yourself with your money."
This is a half-truth statement and many people follow! May I ask, How great a progress are you going to make alone? Heard of the phrase No man is an island?
FE: Dare to trust. Be sharp about the company you keep and always use a contract to protect your interest.
This is a half-truth statement and many people follow! May I ask, How great a progress are you going to make alone? Heard of the phrase No man is an island?
FE: Dare to trust. Be sharp about the company you keep and always use a contract to protect your interest.
It is great to instill independence and doing your best from a young age. But being strong alone is insufficient; against the weight of the world no one man has enough strength. Again, No man is an island.
FE: So yes, be independent and excel, and align with other successful people, who compliment and strengthens you, to function as a team. Leverage on/ and off each other to make greater progress.
FU teaches: "Don't let others steal your ideas. Keep it to yourself. Don't share freely."
What good is an idea not materialized? There are many brilliant people out there keeping their brilliance to themselves. How does keeping your idea to yourself make you rich?
FE: Share your ideas, only then can you progress and improve. Get the right people on-board to help you materialize your ideas.
What good is an idea not materialized? There are many brilliant people out there keeping their brilliance to themselves. How does keeping your idea to yourself make you rich?
FE: Share your ideas, only then can you progress and improve. Get the right people on-board to help you materialize your ideas.
FU teaches: "Work hard, spend less and save your money."
Seriously doesn't that sound like something people who are tight for money would tell you?
FE: Work smart, plan on what you can afford to spend and how you can spend more. Learn how to be creative and invest your money.
FU teaches: "Save your money for retirement. Enjoy life when retired."
Isn't that pretty sad? To enjoy life only nearing one's end?
The truth is most people succumb to temptation and enjoy as soon as possible anyway. Rake huge bills from their lifestyle expenses, which leads to them being caught in a vicious cycle. Yes?
FE: While working, start investing. No capital, be creative & learn how to leverage. Attain financial freedom as young/soon as possible. Then enjoy life.
FU teaches: "Investing is risky. Best to leave your money alone."
Investments does carry risk. But given what is happening in the world today, down the road we are going to see serious demand/supply issues and great inflation problems. Dual middle income households alone might no longer be enough onwards. With the free and easy stimulus and inability to rein in stimulus, Currency itself is at risk. Not investing is a bad idea.
FE: Investing carries risk but is necessary. Currency is overly diluted.
Lastly,
FU (And many financial institutions, FI aka Financial idiots) teaches: "High returns = High risks"
This is as far from the truth as it gets. Put an untrained driver at the wheel of a car, the vehicle is a danger to all. Change the driver to a skilled professional, he can drive on two wheels and still make you feel at ease.
FE: Being financial uneducated = High risk
Seriously doesn't that sound like something people who are tight for money would tell you?
FE: Work smart, plan on what you can afford to spend and how you can spend more. Learn how to be creative and invest your money.
FU teaches: "Save your money for retirement. Enjoy life when retired."
Isn't that pretty sad? To enjoy life only nearing one's end?
The truth is most people succumb to temptation and enjoy as soon as possible anyway. Rake huge bills from their lifestyle expenses, which leads to them being caught in a vicious cycle. Yes?
FE: While working, start investing. No capital, be creative & learn how to leverage. Attain financial freedom as young/soon as possible. Then enjoy life.
FU teaches: "Investing is risky. Best to leave your money alone."
Investments does carry risk. But given what is happening in the world today, down the road we are going to see serious demand/supply issues and great inflation problems. Dual middle income households alone might no longer be enough onwards. With the free and easy stimulus and inability to rein in stimulus, Currency itself is at risk. Not investing is a bad idea.
FE: Investing carries risk but is necessary. Currency is overly diluted.
Lastly,
FU (And many financial institutions, FI aka Financial idiots) teaches: "High returns = High risks"
This is as far from the truth as it gets. Put an untrained driver at the wheel of a car, the vehicle is a danger to all. Change the driver to a skilled professional, he can drive on two wheels and still make you feel at ease.
FE: Being financial uneducated = High risk
Added on 14 Jun 2010 (& I am shocked to have to add this!),
FU teaches: "Savings."
Until today, as in RIGHT NOW, people are STILL talking about how much they have saved. OMG! http://forums.salary.sg/investments-net-worth/817-whats-your-net-worth.html You work really hard, make your life all stressful and tiring, scrimp and save for your money to sit in your savings account (or under the pillow) to do... what??
FE: Investments - Capital gains and Cashflow
Until next time.
Your Fellow Investor,
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