A Wise Investor Is An Informed Investor
Your financial health can be compared with your nutritional health – and it’s just as important for quality of life.
Consider your meals. You can:
- Eat out, buy packaged food, or hire a personal chef
- Prepare the bare minimum to fill you up with no regard to nutritional content
- Take an interest by watching cooking shows and on-line demos, trying new recipes and reading up on nutrition and meal planning
The more you know, the better decisions you’ll make. You may never become a financial expert – or a gourmet cook – but you’ll be able to make wise and informed choices that will stand you in good stead for the rest of your life.
Related: Where Do You Get Your Financial Information?
To learn more, and to stay abreast of economic events, you can read a wide variety of magazines, newspapers, newsletters, blogs and books. You can take a course on investing or join an investment club.
Books and other publications
Publications, whether on-line or in paper form, are a great source of information about investing, personal financial management, trading, tax planning, saving for retirement, and insurance.
You can read about general financial topics (e.g. MoneySense magazine), guidance for beginning investors (e.g. No Hype by Gail Bebee) or specific information on a subject that interests you (Jacks on Tax by Evelyn Jacks). Browse the shelves of your local library or bookstore.
Bear in mind that Canadian and U.S. books are based on different tax laws, products and procedures.
Detailed market reports are found in the Financial Post and the Globe and Mail, which contain a wealth of information and can keep you informed of the status of your securities investments.
On-line sources
People trying to educate themselves via the Internet will find more “hits” than they could handle in a lifetime. With all this choice comes confusion. Be wary of taking investing tips from unrecognizable sources.
Some good on-line sources are:
- www.getsmarteraboutmoney.ca
- www.thestar.com/business/personal_finance.html
- www.canoe.ca/money
- www.fiscalagents.com
- www.dinkytown.net
- www.monysense.ca
- www.globeinvestor.com
- www.kpmg.ca
- www.investorlearning.ca
- www.ific.ca
Take a course
Completing a course on investing and money management is always a sound undertaking. Courses range from the very basic to the more advanced. Often there’s a fee, but a lot of information is offered free of charge.
Related: 10 Fees Worth The Money
Banks, financial planners, brokerages, insurance companies, colleges and even community groups offer financial seminars. Find out what’s available in your area. Determine the instructor’s qualifications before you enroll and that he or she is unbiased.
Be wary of financial seminars that are very general or are a venue to promote a firm’s products. If the advertisement reads, “Mr. B will discuss why X is the most exciting product in the market today,” it’s probably a clue that the presenter is going to be pitching rather than informing.
Many interested do-it-yourself investors take the Canadian Securities Course or Certified Financial Planning Course, either on-line or at their local college for personal interest rather than aspiring to a financial career.
Final thoughts
Many of us want to take control of our own trading through a discount brokerage and are interested in ideas about how to select an investment. More people want to take responsibility for their investments.
The potential for information overload means the educated investor has to be a discerning student. You could attend a financial seminar seven days a week or spend hours daily reading financial publications.
Related: 5 Misconceptions About Retirement Planning
If you don’t know what something means, don’t be afraid to ask a question – or look it up. Investors should never stop learning and expanding their knowledge.
Read about the basics and then diversify, choosing sources that are easy for you to understand as well as enjoyable. Enjoy the challenge.
People should want as much information about what they’re putting in their portfolios as they do about what they’re putting in their mouths.
So the next time you’re tempted to buy an investment you know nothing about, think of it as a sandwich you found sitting on your desk.
Wouldn’t you want to know more about its origins and history before you began to “stuff it in your mouth?”
Like how you draw parallels between what we eat and our financial knowledge situations. Financial education and literacy is something that should be really emphasized if we are to reduce debt and live more financially responsible & healthy lives. Probably something we should be reminded more often, our greatest financial assets is our brains…and we should definitely nourish it…great post and resources!
@SImon: It seems we’ll be left to our own devices with regard to our future financial means. It’s in everyone’s best interest to become more responsible for both our finances and our health. The public purse won’t be able to afford it otherwise.
Very useful information. I’d like to applaud the notion that critical thinking skills are vital. I used to work for Canadian Shareowner, which sells investment advice and other services. One of their claims was that a subscriber had become wealthy by investing in JDS Uniphase. That made for some flashy articles featuring photos of fancy sports cars that the happy investor had supposedly bought. Only problem is that this was a marketing ploy, and not true. (One tell-tale sign was that the subscriber was never identified.) I found your list of top dividend stocks far more credible, in that gave specific results that I could verify. Thank you
@CanadianDaniel: I would really be leery of any financial seminar that enthusiastically promotes only one product or strategy and offers testimonials from people who have made it rich in only a few months with this “safe” investment.
These “rah-rah” type of events have only one purpose – to separate you from your hard earned money.
Being an informed investor is really important and the earlier one starts the better. High school students can easily understand the basic of investing. In fact, they eat it up when I talk about it in my personal finance class. Just imagine if we had all invested at age 18 instead of spending our money on so many frivolous things. Ugh! It hurts to think about it.
@Brian: I don’t know what’s in school curriculums these days but financial education, from management to investing, should be addressed at least by middle school.
Building a model portfolio teaches investing basics and the competitive aspect can illustrate the rewards and pitfalls of different types of risk. It’s better to learn in a game than make poor choices in real life.
Even pre-schoolers are interested in money.
One of the things I do not understand is how everyone eats and uses money everyday and still does not learn how use either one effectively. Learning about food and personal finance will improve your life, but most do not take an interest in either one. The outcome seems obvious!
@krantcents: Everyone know what they should do – eat less, save more – but some just don’t do it. I guess they’re looking for a magical solution.
Even some of the “recognizable sources” may offer investing tips of dubious value. Almost every news station on TV or the radio warbles on about some company that everyone should be investing in. The problem is that they are often talking about speculating not investing. Their criteria seem to revolve around whether a stock can make a huge capital gain in a short time. Most investors should not even be looking at those types of stocks but they will blindly follow the tips without following your excellent advice to become educated first and consider the source and the match between the recommendation and their own financial needs.
Now I’m going to take your other excellent advice and plan out a few nutritious meals to get us through the rest of this week!
@Bet Crooks: News reports get their information from independent sources that have their own agendas. They’re interested in news that will be more exciting to their viewers. A company that has incredible growth in a short period of time is more interesting than one that grows slowly but steadily.
By recognizable source I mean established organizations that give unbiased reporting of the facts. Just because I recognize Kevin O’Leary’s name doesn’t mean I would necessarily accept his recommendations without further investigation.
You can’t stress the importance of financial education enough. Sadly it’s barely taught in schools and many grow up with horrible financial habits. I try to learn something new about money every day and can see it constantly pay off.
I always say getting information and then acting on it are two different things. Folks may read about a certain subject like personal finance but very few people act on it. Information “don’t mean nothing” unless you act on it to make your life better than before.