People ask me a lot of questions about money and what to do with it. Some questions are specific such as, “Should I invest in stocks? In bonds? In gold or real estate?” Other questions are about IRA’s or other various retirement accounts. But the one of the questions that comes up most often is: “What is the best investment?” Today we are going to talk about that, and how you can learn to make that judgment for yourself.
Most people focus on trying to find the best investment when true success comes from realizing that all investments are neutral.
That’s right – the success of any investment depends on what you the investor is doing more than on how the product or stock is performing. In fact, two different people can be set up in the exact same investment – one might come out with huge gains and the other end up broke. This is because the value of an investment has everything to do with the financial goals and objectives of the investor. My definition of a good investment is this:
A wise investment is an investment that you understand.
People get caught when they invest in something that is not appropriate for their individual situation. Raising your financial IQ will help you understand what you are investing in and why so that you know what you are doing. There are several ways you can raise your financial IQ:
- access resource tools such as books, classes and workshops from trusted sources and professionals that are Mission Driven Advisors.
- get clear about your long term goals
- work with professionals who seek to raise your IQ, and not just conduct a transaction on your behalf.
We have all been taught to trust in the wisdom of professionals, but what I recommend is that professionals earn your trust first before you give it away. What you are looking for are people who offer you not only service, but who seek to raise your level of knowledge in their given area.
Give your trust to those professionals who help raise your financial IQ while at the same time adding value to your specific situation through co-creation and service.
This applies to your real estate agent, lawyer, Accountant, and any professional whom you rely upon for advice. They should begin with you first, seeking to understand your life situation and objectives. If they don’t start with understanding you first, how can they know if they are helping you or not? The answer is they can’t. An advisor may know all about the best performing mutual fund this year or hot topic, but that doesn’t mean it’s what you should be signing up for right now. In other words,
It’s All About You, Baby!
It’s that simple. A sound partnership begins with the skills of the professional and the goals of you, the client. While I appreciate that my clients trust me, I want them to understand what they’re doing and why they’re doing it. If you understand something, you’re actually gaining wisdom and you can build on that for the rest of your life. But if you’re just doing what I tell you to do for 20 years and then something happens to me, you won’t have grown at all. It is my goal that after working with me, you become a better investor. Things that were risky before are now wise decisions because your financial IQ has been raised.
Successful people understand that it’s the person, not the money, that is the asset.
Seek to find professionals who think this way, and you will be well on your way toward building a team that can help you move forward with towards your RichLife with certainty not luck.
What have you done to raise your financial IQ? What would you recommend to others?
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