Importance of being Financially Educated. How To Be Wealthy And Why 95% Never Will Be

"You will never be wealthy working for someone else at a job - EVER!"

Once you have knowledge, you can seized opportunities when they come along, because you can recognize them.

Become an Entrepreneur. As an entrepreneur, you gain time freedom and financial freedom.

The broker buy stuff
The middle class buy liabilities
The rich buy assets that create passive cash flows which can then be reinvested to increase these passive cash flows further.  This is the wealth creation formula.
You cannot find these passive cash generating opportunities unless you are open to hearing about them.  Once you find them, you have to see which fits you and then act.







Published on 27 Aug 2013
How to become wealthy without a college degree
artwest.hubpages.com › ... › Financial Advice and Tips‎
Dec 3, 2012 - Many people think you must have a college degree to get rich, that is not necessarily true. Here is how you can get wealthy without a college ...
These Are The 20 Best Jobs That Don't Require a College Degree ...
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May 18, 2012 - To be clear, no one is saying that a college degree is completely useless. .... What do most rich people do ? ..... positions and then realizing compared to the debt I am in, and the jobs that those without college degrees can get, ...
Six Figures, No College Degree
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She has managed to reach a six figure salary without a college degree. ... Whatever the reason, don't become a cubicle-sitter unless you are not looking to .... Tens of millions, rich and poor, worked together at Elks Lodges and Rotary Clubs.
10 Best Jobs You Can Get Without a College Degree-Kiplinger
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To identify the ten best jobs you can get without a college degree, we focused on two critical factors: salary and job growth.
Skip college, make money fast: 10 high-paying jobs that don't ...
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Can I become rich without college degree? - Yahoo! Answers India
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The only 2 classes that an investment student needs to take

Buffett believes that investment students need only two well-taught classes:

1.  How to Value a Business?

2.  How to Think about Market Prices?

Financial literacy is a lifelong endeavor.

Are These Investors Getting Dumber?

Alexander Green, Chief Investment Strategist, The Oxford Club


I've long lamented that basic financial literacy is not a routine part of a high-school education in this country. Students routinely graduate without understanding compound interest, IRAs, mortgages or why we even have a stock market.

And so they trundle out into the real world, saving little, investing poorly (or not at all) and - typically - paying 18.6% annual interest on their credit cards. Within a few years, they are deep in a hole, trying to dig themselves out, and telling anyone who will listen of the essential inequity of the capitalist system.

It can take the average person years, if not decades, to learn (if ever) how to save, invest, minimize taxes and enjoy a measure of financial independence.

Yet in a new study out of Texas Tech University, Dr. Michael Finke and his colleagues reveal that financial literacy actually worsens as we get older. The study shows that knowledge of basic concepts essential to effective money management declines by about 2% each year after age 60.

However, confidence in financial decision-making abilities does not fall. That means folks who live to age 90 are, on average, only half as smart about money as they were at age 60, but they are no less confident about investing it.

Made for Calamity

Talk about a recipe for disaster. After all, nowhere is overconfidence more soundly punished than in the financial markets, where outsized optimism and big egos routinely get taken down like the Berlin Wall.

Look at just a sampling of the questions many older Americans flunked:

Net worth is equal to:
A. Total assets
B. Total assets plus liabilities
C. Total assets minus liabilities

Which bank account is likely to pay the highest interest rate on money saved?
A. Savings account
B. Six-month CD or certificate of deposit
C. Three-year CD

The main advantage of a 401(k) plan is that it:
A. Provides a high rate of return with little risk.
B. Allows you to shelter retirement savings from taxation.
C. Provides a well-diversified mix of investment assets.

People who cannot answer these basic questions should not be managing their own money.

And they definitely shouldn't be buying variable annuities, whole life insurance and long-term care insurance.

Those products are generally so complicated - so full of caveats, drawbacks, and hidden fees and penalties - that even people in the industry, including the majority of those who sell them, don't fully understand them.

Knowledge is indeed power. And financial literacy is a lifelong endeavor.

That means you should do everything you can - from reading the handful of classic investment books to learning the essential money-management principles we talk about here each day - to make sure you know as much as you can about how to boost your savings, reduce your federal and state taxes, minimize your investment costs, and achieve your financial goals with as little risk as possible.

And if you have an older relative who is losing his or her investment competence - and is therefore increasingly vulnerable to smooth-talking brokers, life insurance agents and self-styled "financial planners" - get together with close family members and intervene.

Their financial well-being - not to mention any potential inheritance - may well depend on it.

Good investing,

Alex


http://www.investmentu.com/2013/November/are-these-investors-getting-dumber.html?src=email#comment

Your Guide to Wealth - The Importance of Financial Education (Rich Dad, Poor Dad)

Many look for job security.
However, it is better to aim for Financial security.

Robert Kiyosaki - 3 Types of Income

The Role Of Parents In Financial Education

May 23, 2013

As the global economic recovery continues to lose momentum, the issue of financial literacy is becoming increasingly prevalent. This has already prompted political leaders in the United Kingdom and Australia to propose mandatory financial education for students, while the Consumer Financial Protection Bureau (CFPB) in the United States has made numerous recommendations concerning the advancement of fiscal literacy within independent states. Providing a comprehensive financial education to youngsters represents a significant responsibility; however, it is a duty that cannot be carried by schools and local authorities alone.

The Link Between Financial Literacy and Economic Growth
To understand the importance of financial literacy, it is important to consider the recent economic crisis that has engulfed the world. Essentially the result of irresponsible lending and reckless investment, the crisis showcased how poor financial decision-making impacts citizens, business owners and political leaders alike. While banks and lending institutions may have accepted considerable criticism for their role in triggering the recession, it is important to remember that millions of consumers were also willing to enter into poorly thought out and unmanageable financial agreements.

Further support for the importance of financial literacy can also be found in household debt levels from the last five years. Cumulative consumer debt reached its peak of $12.68 trillion at the height of the global recession during the third quarter of 2008, while it has continued to fall as the economy has showed tentative signs of growth. Totaling $11.23 million during the first quarter of 2013, its decline shows that decreased borrowing and more considered financial decision-making has resulted in a more prosperous economy.

So when it comes to economic growth, it is clear that the fiscal decisions that we make as individuals have a tangible impact on the overall economy. Joint research products between the George Washington University School and the University of Pennsylvania have sought to provide more context to this theory by evaluating how low levels of financial literacy lead directly to money-losing decisions and transactions. The results reveal considerable gaps in consumer knowledge concerning pension accounts, credit agreements and the impact of interest rates, which can now be measured in dollars and cents and afford a monetary value to the importance of financial literacy.

Who Should Shoulder the Burden for Imparting Financial Education?
As education remains a matter for the local authority in each state, it is unlikely that the U.S. will see mandatory reforms implemented at a federal level. Despite this, however, there is a common consensus among political leaders that dictates that financial education will be a universal feature of the K-12 curriculum by the end of 2014. While this will make local schools and government bodies primarily responsible for teaching financial literacy nationwide, it is also important to appraise the role of parents and established fiscal institutions.
In general terms, parents and schools must collaborate to deliver a comprehensive education to their children. While parents are charged with cultivating positive behavioral patterns and imparting fundamental values, it is the role of educational authorities to teach academic skills and subject matter. There is an imbalance when it comes to financial literacy, as the current generation of adults are hindered by a distinct lack of money management skills. According to a recent Consumer Financial Literacy survey conducted in 2012, just 59% of adult respondents had savings, while approximately one in four continued to spend outside of their means.

This skills gap is a vast and obvious one, and it has prompted both local authorities and banking organizations to drive financial literacy themselves. In fact, the American Bankers Association has been a keen supporter of financial education since 1997, when it introduced the innovative "Teach Children to Save" program as a way of emphasizing the importance of saving money. While these efforts and recent work by the CFPB have partially offset the lack of parental knowledge, guardians cannot ignore the importance of financial literacy and must instead be encouraged to support a detailed program of education.

The Bottom Line
The need for a concerted program of financial education cannot be ignored, and even though many parents are ill-equipped to lead the charge, they can at least support the efforts of state schools and banking institutions. They certainly cannot afford to adopt the same approach as parents during Chef Jamie Oliver's drive to introduce healthy and nutritional school dinners in the U.K., as thousands allowed their ignorance and lack of knowledge to compromise an extremely beneficial government initiative. By understanding their own shortcomings when it comes to financial literacy and welcoming the local governments' attempts to redress this considerable imbalance, parents can still play a proactive role in creating an entire generation of responsible adults.

Check out our series of guides designed to help you teach financial literacy to children of all ages.

http://www.investopedia.com/articles/personal-finance/052313/role-parents-financial-education.asp?utm_source=financial-edge&utm_medium=Email&utm_campaign=PF-5/28/2013

Importance of Financial Education and Knowledge in Investing in the Stock Market

The tragedy is that people work so hard to earn money, and then they lose so much of it on the stock market because they haven’t taken the relatively simple steps to educate themselves about it.

First rule of Buffett: Do not lose money.


April 4, 2013
Mom and pop: The world’s worst investors
Commentary: They buy high, sell low, and the ending is predictable

By Brett Arends
Oh, brother.

I don’t know Mark Villa and Lucie White, a pair of doctors in Houston, Texas, who were featured in a big story in our sister publication, The Wall Street Journal, a few days ago.

And I wish them all the best.

But when I read the story about them, and other “mom and pop” investors rushing to jump back into the booming stock market, a few words crossed my mind.

The more printable ones included “Uh-oh” and “Doom.”

You know how, when you get older, the movies just get so predictable you can hardly bear to go any more? Within the first five minutes you can already tell how the whole story is going to end.

So I’m sorry, but when I read “Mom and Pop Run With the Bulls,” all I could think was, here we go again.

My Journal colleague Jonathan Cheng’s story tells you everything you need to know. Villa and White felt “sucker punched” when stocks collapsed in 2008, he reports. The crash “wiped out half their savings.” They sold out of stocks, put their money in the bank, and “swore off stocks,” presumably forever.

Last month, as the Standard & Poor’s 500 index surged to new highs, they hired a new financial adviser and plunged into the stock market again.

The problem with Villa and White isn’t that they are unusual but that they are absolutely the typical American investor. Both of them are doctors, meaning they are presumably intelligent and educated. And yet they insist on investing like absolute fools.

First, their minds have been playing tricks on them all along. The crash of 2008 did not wipe out half their savings, unless they invested all their money right at the peak and sold right at the bottom. The reality is that it wiped out a lot of illusory gains and replaced them with a lot of illusory losses. Stock prices were wrong in 2007 because they were too high, and they were wrong in late 2008 and early 2009 because they were too low.

Second, as they now know, they sold out somewhere near the lows. They were not alone. According to the Investment Company Institute, the trade body of the mutual fund industry, U.S. investors flooded the market with stocks in the fall of 2008 and the winter of 2009. From September, 2008 through March, 2009, ordinary U.S. investors dumped $114 billion worth of stock funds. They sold at absolutely the worst time.

This is not a coincidence. The stock market is “us.” Share prices fall because there are more sellers than buyers. They rise because of the reverse. So mom and pop investors like the Villa-Whites rush to dump their stocks because they see the market plummeting, oblivious to the fact that the only reason it’s falling is because people like them are rushing to dump their stocks.

And here we are in the opposite situation. The Investment Company Institute reports that mutual fund investors have pumped about $20 billion back into stock funds since the start of the year. Mom and pop investors across the country, just like the Villa-Whites, are rushing to buy stocks so they don’t “miss out” on big gains. The reality is that stocks have risen, in part, because people like them have rushed to buy stocks. And the more of them rush to buy stocks, the higher they drive the price.

Study after study has found the grim truth. People like the Villa-Whites end up losing money for years, even when the stock market has gone up, because they have sold at the wrong times and bought at the wrong times. They have consistently bought high and sold low. You could have made astonishing super-normal profits over the past thirty years just by selling stocks when Mom and Pop were buying, and buying stocks when Mom and Pop were selling.


Be like Buffett: Buy low and sell high.

Have you heard of Suicide Chess, a peculiar game where the rules are reversed and you try to lose all your pieces? Mom and pop investors like the Villa-Whites are playing Suicide Roulette.

The tragedy is that people like the Villa-Whites work so hard to earn money, and then they lose so much of it on the stock market because they haven’t taken the relatively simple steps to educate themselves about it.

There is no great mystery to the stock market. The longer I follow it, the less complicated it actually becomes. Buy stocks when they are cheap and everyone is afraid to own them. Don’t buy stocks when they are expensive and everyone is afraid of getting “left behind.” In other words, be fearful when others are greedy, and greedy when others are fearful. This is no great insight — Warren Buffett keeps saying it. The Villa-Whites were selling their stocks around the time Buffett was buying — and telling everyone he was buying too.

But the message just gets lost.

There are reasons for that. They include the Federal Reserve’s policy of Forever Blowing Bubbles, which has played havoc with the idea of the sensible long-term investor. They also include the spreading influence of a cult called the Efficient Market Hypothesis, which downplays the importance of the actual price you pay for stocks. It is horrifying how many financial advisers have bought into the nonsense of the EMH, often without even understanding it.

In late 2008 and early 2009 I was tasked by The Wall Street Journal with finding good value stocks for people to buy. And my job was very easy. There were so many cheap stocks around you could scoop them up with a spoon. Indeed in October 2008 I described it as “shooting fish in a barrel.” I was six months early, but so what?

Today it is very hard to find stocks that look great value, especially here in the U.S. And people like the Villa-Whites are rushing to buy stocks before they go to infinity.

I fear I have seen this movie before.

Brett Arends is a MarketWatch columnist. Follow him on Twitter @BrettArends.

http://www.marketwatch.com/story/mom-and-pop-the-worlds-worst-investors-2013-04-04

Investment Basics (a 38 Week - Comprehensive Course)

Investment Basics (a 38 Week - Comprehensive Course)
By: Professor Steven Bauer

Text: Google has the answers to most all of your questions, after exploring Google if you still have thoughts or questions my Email is open 24/7.

Each week you will receive your Course Materials. There will be two kinds of highlights: a) Prof's Guidance, and b) Italic within the text material. You should consider printing the Course Materials and making notes of those areas of questions and perhaps the highlights and go to Google to see what is available to supplement those highlights. I'm here to help.

Freshman Year

Course 101 - Stock Versus Other Investments
Course 102 - The Magic of Compounding
Course 103 - Investing for the Long Run
Course 104 - What Matters & What Doesn't
Course 105 - The Purpose of a Company
Course 106 - Gathering Information
Course 107 - Introduction to Financial Statements
Course 108 - Learn the Lingo & Some Basic Ratios

Sophomore Year

Course 201 - Stocks & Taxes
Course 202 - Using Financial Services Wisely
Course 203 - Understanding the News
Course 204 - Start Thinking Like an Analyst
Course 205 - Economic Moats
Course 206 - More on Competitive Positioning
Course 207 - Weighting Management Quality

Junor Year

Course 301 - The Income Statement
Course 302 - The Balance Sheet
Course 303 - The Statement of Cash Flows
Course 304 - Interpreting the Numbers
Course 305 - Quantifying Competitive Advantages

Senor Year

Course 401 - Understanding Value
Course 402 - Using Ratios and Multiples
Course 403 - Introduction to Discounted Cash Flow
Course 404 - Putting DCF into Action
Course 405 - The Fat-Pitch Strategy
Course 406 - Using Morningstar as a Reference
Course 407 - Psychology and Investing
Course 408 - The Case for Dividends
Course 409 - The Dividend Drill

Graduate School

Course 501 - Constructing a Portfolio
Course 502 - Introduction to Options
Course 503 - Unconventional Equities
Course 504 - Wise Analysts: Benjamin Graham
Course 505 - Wise Analysts: Philip Fisher
Course 506 - Wise Analysts: Warren Buffett
Course 507 - Wise Analysts: Peter Lynch
Course 508 - Wise Analysts: Others
Course 509 - 20 Stock & Investing Tips

This Completes the List of Courses.

Wishing you a wonderful learning experience and the continued desire to grow your knowledge. Education is an essential part of living wisely and the experiences of life, I hope you make it fun.

Learning how to consistently profit in the Stock Market, in good times and in not so good times requires time and unfortunately mistakes which are called losses. Why not be profitable while you are learning? Let me know if I can help.

http://www.safehaven.com/article/20772/investment-basics-course-505-wise-analysts-philip-fisher

Author: Steve Bauer

This is a Course called "Investment Basics" - created by Professor Steven Bauer, a retired university professor and still active asset manager and consultant / mentor.

2011

• Investment Basics - Course 509 - 20 Stock and Investing Tips - from - 25 May 2011
• Investment Basics - Course 508 - Wise Analysts: Others - 18 May 2011
• Investment Basics - Course 507 - Wise Analysts: Peter Lynch - 11 May 2011
• Investment Basics - Course 506 - Wise Analysts: Warren Buffett - 04 May 2011
• Investment Basics - Course 505 - Wise Analysts: Philip Fisher - 27 Apr 2011
• Investment Basics - Course 504 - Wise Analysts: Benjamin Graham - 20 Apr 2011
• Investment Basics - Course 503 - Unconventional Equities - 13 Apr 2011
• Investment Basics - Course 502 - Introduction to Options - 06 Apr 2011
• Investment Basics - Course 501 - Constructing a Portfolio - 24 Mar 2011
• Investment Basics - Course 409 - The Dividend Drill - 16 Mar 2011
• Investment Basics - Course 408 - The Case for Dividends - 10 Mar 2011
• Investment Basics - Course 407 - Psychology and Investing Wisely - 03 Mar 2011
• Investment Basics - Course 406 - Using Internet Sources for Research - 23 Feb 2011
• Investment Basics - Course 405 - The Fat-Pitch Strategy - 17 Feb 2011
• Investment Basics - Course 404 - Putting DCF into Action - 09 Feb 2011
• Investment Basics - Course 403 - Introduction to Discounted Cash Flo - 02 Feb 2011
• Investment Basics - Course 402 - Using Ratios and Multiples - 26 Jan 2011
• Investment Basics - Course 401 - Understanding Value - 20 Jan 2011
• Investment Basics - Course 305 - Quantifying Competitive Advantages - 12 Jan 2011
• Investment Basics - Course 304 - Interpreting the Numbers - 05 Jan 2011

2010

• Investment Basics - Course 303 - The Statement of Cash Flows - 29 Dec 2010
• Investment Basics - Course 302 - The Balance Sheet - 22 Dec 2010
• Investment Basics - Course 301 - The Income Statement - 15 Dec 2010
• Investment Basics - Course 207 - Weighing Management Quality - 08 Dec 2010
• Investment Basics - Course 206 - More on Competitive Positioning - 01 Dec 2010
• Investment Basics - Course 205 - Economic Moats - 24 Nov 2010
• Investment Basics - Course 204 - Start Thinking Like a Financial Ana - 17 Nov 2010
• Investment Basics - Course 203 - Understanding the News - 10 Nov 2010
• Investment Basics - Course 202 - Using Financial Services Wisely - 03 Nov 2010
• Investment Basics - Course 201 - Stocks and Taxes - 27 Oct 2010
• Investment Basics - Course 108 - Learn the Lingo--Basic Ratios - 20 Oct 2010
• Investment Basics - Course 107 - Introduction to Financial Statement - 13 Oct 2010
• Investment Basics - Course 106 - Gathering Relevant Information - 06 Oct 2010
• Investment Basics - Course 105 - The Purpose of a Company - 29 Sep 2010
• Investment Basics - Course 104 - What Matters and What Doesn't - 22 Sep 2010
• Investment Basics - Course 103 - Investing for the Long Run - 15 Sep 2010
• Investment Basics - Course 102 - The Magic of Compounding - 08 Sep 2010
• Investment Basics - Course 101 - Stocks and ETFs Versus Other Invest - 01 Sep 2010

http://www.safehaven.com/author/557/steve-bauer

Do yourself a favour, invest in your financial education before you invest in the markets

"Risk comes from not knowing what you are doing." 

Risk can be alleviated with proper education and experience.  This is the same process that you must commit to undertake when you decide to invest in any market.  First and foremost, you must get yourself educated. 

It is strange that most parents would not think twice to pay high school fees to send their kids to university, when there is no real guarantee that they will succeed in life after getting their degree.  However, when it comes to paying for financial education, where there is a chance they can lose all of the kids' education funds, many people shy away because of the price.  Instead, they would rather risk their hard earned money in a market or instrument that they have little knowledge of, or worse, investing based on rumours or tips from various unverified sources.

Most people are attracted by the myth of quick, easy money from investing (or trading) but fail to understand that it takes a lot of hard work to be successful.  Everyone equates being a doctor or lawyer to earning lots of money.  But it is also common understanding that to be a doctor or a lawyer requires one to put in many years of education and practice before one can be successful.  Ask anyone about his or her current job and you would most likely get the same response that hard work is the norm.  How then can it be different for investing (and trading)?

"Risk comes from not knowing what you are doing" - a famous quote from Warren Buffett.  

It sounds simplistic, but it epitomises the real meaning of the work "Risk".

Any instrument, be it stocks or forex will be dangerous if you don't know what you are doing.  it is not the instrument but the level of the investor's understanding of the instrument and the market that determines his risk level.  So, do yourself a favour, invest in your financial education before you invest in the markets. 

Here is another quote from Mr. Buffett: "The most important investment you can make is in yourself.."

Young Professionals Mistakenly Put Off Financial Planning. Waiting until you consider yourself ‘established’ will hamper your long-term success. Get Financially Educated EARLY.

Henry Stimpson, Friday, June 1st, 2012

Your Money >>>

 

Young Professionals Mistakenly Put Off Financial Planning

Most young professionals put off serious financial planning until they’re older, which is a mistake, says a certified financial planner (and young professional).

 

Most rising professionals avoid making financial decisions, or worse, make bad decisions because they lack good information or professional help, says Anthony Criscuolo with Palisades Hudson Financial Group in Fort Lauderdale, Fla.

 

“This is the time to put your financial house in order,” he says. “The decisions you make from about 30 to 40 may have the most significant impact on your future financial success.”

 

Once you’re making enough money to set some aside, you’ll need an investment plan with a sensible asset allocation, he says. Too many young professionals go to the extremes of either keeping everything in cash or betting aggressively on a few stocks.

 

“We see 50-year-olds come to our office with $500,000 parked in cash because they feel they had to wait until they were wealthy enough to get financial advice and start investing,” he says. “If they had received good investment advice years ago, they could have accumulated two or three times as much.”

 

It’s more than just investment advice. Young professionals often gloss over insurance. Besides car and home or renters’ insurance, most married professionals need term life insurance. Disability insurance is important for all professionals. Selecting the best insurance coverages can be complicated, and it takes research and sometimes outside advice, Criscuolo says.

 

While tax and estate planning may seem premature at this stage, it’s important to lay the groundwork early for more complicated planning later in life, he says. For instance, if you have children, you’ll need a will to specify who’ll take care of them in case both you and your spouse die.

 

How to Get Unbiased Advice

Knowing where to look for help isn’t always easy. Most young professionals either take a do-it-yourself approach or find a transaction-focused, commission-based advisor who pushes his firm’s products.

 

While you may be working with ethical and competent people, they’ll usually steer you to products that produce big commissions, according to Criscuolo.

 

“It’s not that their advice is always bad or wrong, but it can be biased,” he says.

 

Furthermore, most brokers, agents and bankers don’t provide comprehensive, integrated financial planning. They know just their piece of the pie.

 

A comprehensive, fee-only financial advisor can address investments, taxes, estate planning, insurance and retirement planning together rather than in isolation. But the best full-service financial planning firms are usually only interested in working with clients who have a lot of money to invest.

 

“This creates the false sense that financial planning is only for those who are already well established in their lives and careers,” he says.

 

So, where can a rising professional turn?

 

Not all fee-only planning firms will show you the door. Some are willing to waive their minimums and work with a young professional on a limited basis, he says. For instance, the advisor may recommend a one-time meeting to create an investment plan that the client can self-implement.

 

“Find a firm that’s willing to see the value in building a long-term relationship and working with you now and throughout your career,” Criscuolo says.

 

As the professional matures, he or she can turn to the advisor for additional services over the years and eventually become a full-service client.

 

“Waiting until you consider yourself ‘established’ will hamper your long-term success,” he says.

 

An advantage of starting early with a top-notch, comprehensive advisor is that you’ll be able to keep that firm for many years, Criscuolo points out. If you start out with a smaller or less sophisticated advisor, you’ll need to switch when you’re older and have more complex and diverse needs.

 

“You want an advisor that you can grow with,” he says.