Investors are bombarded with information, often contradictory, on what they should do, where they should invest and whom they should trust. Add to that the fact that investment industry comes with its own lexicon of terms and ideas unfamiliar to the general public, and the whole business of investing can feel… confusing.
How does one cut through all the noise and empower her/himself to invest wisely? First of all, you have to understand that you don’t need to manage your personal finances in a vacuum. It is not incumbent on you to understand everything about investment; there are reputable, high-performing, goal-oriented wealth management companies that can help you.
Empowering investors to achieve their financial goals has an obvious net positive impact on society, which is why companies like Wealth Management Canada exist; they help match investors with quality wealth management companies, providing an open, accessible and transparent view of industry options. As for personal empowerment, here are a few things investors can strive to do:
Be Informed
You don’t need to keep up with the market in a way that a day trader does, but having a basic understanding of the market can help you make informed investment choices. As a jumping off point, the site Investopedia is helpful; they offer a stocks basic tutorial that breaks down in layman terms the way the stock market operates, emphasizing its use as a vehicle for average people to grow their wealth.
Learn Some Of The Terminology
Don’t know the difference between stocks and bonds? Can’t make heads or tails of mutual funds and Exchange Traded Funds? Don’t fret. Since the average education doesn’t entail learning these basic investment terms, many people are still hazy on their meaning. This article from The Balance will get you part of the way there, defining basic terms like “stocks” and “bonds”, as well as more advanced terms, like “PEG ration” and “dividend yield”.
Be Sceptical
Always ask questions and gather as much information as possible about a potential investment opportunity. Don’t simply invest in something because that’s what everyone else is doing. Here is where a wealth management company can really help – they can help explain investment opportunities and help you invest with an emphasis on long term performance rather than short-term trends.
Know Yourself
Too many people make investment decisions with the single-minded intent of getting money, without understanding the risks involved. Be honest about your living situation, understand your risk tolerance and formulate concrete financial goals. The better you understand what you want from your finances, and the level of risk you are willing to take on to achieve those goals, the better positioned you will be to invest properly.
The easiest way for investors to empower themselves is to partner with an investment management company, and work with a professional wealth manager. In the meantime, informing yourself, learning key terms, practicing healthy scepticism and understanding your financial goals are all fantastic ways to get started investing the right way.