Helping out a friend or relative in need [Investing Knowledge]
By ABCs of Investing
This guest post was written by ABCs of Investing – a brand new site for novice investors which offers two short and quick investing posts per week. Feel free to subscribe to their feed.
Do you have friends or relatives who don’t know what kind of investments they own? Couldn’t tell you the difference between a mutual fund and a mutual friend? If you ask them about stock market indexes, they start trying to remember which of their fingers is the index finger?
If you are a true friend then you will tell them to start learning about investments! Tell them that investment knowledge, in however small amount, is the most valuable thing they will ever possess. Some people tend to see investments as something that you are either an expert at or you know nothing and hire an expert to invest for you. Nothing could be further from the truth!
Even “financial experts” at not experts at all things financial – everyone has their areas of expertise and weakness. The reality is that most people don’t have the time or interest to become a true financial expert, but that doesn’t mean they can’t learn enough to at least know what is going on. It doesn’t matter if you have a financial adviser or not – financial education should be a priority for you. Financial advisers are generally paid by commission, so if you don’t know anything about your portfolio or financial goals then you run the risk of being taken advantage of by your adviser. He or she might be tempted to put you into investments that are more suited to their pocketbooks rather than your own. Nobody cares about your money like you do.
How do I get my friend/relative/neighbor to start learning?
Start with asking questions – what do they invest in? Are they planning for retirement? Or if that is too nosy then maybe tell them about your investments and portfolio planning. If they are receptive to this sort of conversation then maybe suggest a book they can read – find out some good financial books and email them a list. Suggest some blogs or websites they can learn from. Bottom line is that the more reading they do – the better.
“There were monsters on that ship and truly we were them” – Lisa Simpson
If you are thinking that maybe you need some financial education as much as, if not more so, than your friends then I can say only one thing – get learning!!
I try to never give investment advice, it is just too dangerous, especially with family and friends.
I agree with not giving specific advice, my advice is always that they should at least invest, and not just place all there money in a high interest savings account. But unless you are a professional adviser, you really shouldn’t give investment advice – as the blog says, encourage them to read and learn!
With the markets falling and media covering every angle of this recession, it’s harder for anyone, including myself (who hasnt seen a positive return since I began investing 2 years ago, i’m 24 now), to grasp the concept of why investing in the stock market and any other volatile investment. I rather just not give much advice right now though i do understand the big theory of buying low (now) and selling high.