Monday, February 4, 2013
A few years ago I decided, after much research, to begin managing my own money. That meant signing up for my own trading account with a brokerage firm. It was much easier than I thought it would be. I have never exactly had a bad financial advisor who mismanaged my money in an obvious thieving kind of way, but after I began to learn about investments, the stockmarket and all that it entails, I realized that simple is better and that I could do as well or better than they were for me. Another thing I realized is that the whole setup is geared to make them and their organization money. Nothing wrong with that but most of us don't realize that they take their share of your money first and we get the rest. I want all of it for myself especially if I am willing and able to do the work to invest my money.
It is not for everyone, I realize. I've heard stories of people investing too much of their retirement money, for example, in tech stocks or something like it that they thought for sure would go up, only to find that they lost a lot of their money. I'm not rich so I don't want to lose any if I can help it. As Warren Buffet says " first rule of investing is: don't lose the money, second rule is: don't lose the money". Sounds obvious but it isn't. People are so sure they can make a fortune with one good pick on a hot tip, but too often it fails miserably. I, on the other hand, am almost too cautious, although I'm not sure that there is such a thing in investing. As I've mentioned in a previous post I read a book called Your Money or Your Life a few years ago and it changed everything for me. The main author was a financial advisor himself and saw the corruption and self-serving nature of the investment business and vowed to get out of it. So he saved hard and invested it all in totally safe investments (in his case it was bonds which were more lucrative at that time) then he left the business and spent the rest of his life educating people about taking charge of their own investments. This book made such an impact on me and really hit home about some of my very personal values. I am so glad I read it.
Unlike him, I can't afford to retire yet, but I am doing my best to plan for that. Last year I took some of my money out to pay for some of the renos we are doing. This is money well spent as far as I'm concerned. This house will be really wonderful when it's all done. The rest I am investing in mostly low cost index funds and bond funds that are pretty safe. I also occasionally take a chance, with a small amount of money, on a business that I think is fairly safe but going through a downturn for some reason. So far this has been a workable strategy for me. Everyone has their own plan, you have to know what you are comfortable with.
The first and most important step is to educate yourself, I used the website investopedia to begin my learning and found it very helpful.
As we've all discovered in the last few years, the financial industry is largely there to protect their own interests and make themselves more money. As a wise person once said, 'no one cares about your money more than you do' . So true.