This article is about the other half of the debt equation. Okay you have managed to tame the debt monster and you are doing well. The credit cards are paid off and your home mortgage is getting smaller. Finally there is some money for investing. Where do you put it? Most likely you know someone in the ‘financial service industry’. First question, whom are they servicing?
They are normally not serving you! The term financial service includes, banks, trust, insurance, credit unions, investment houses and likely a few others. These companies each provide vastly different services, the one common denominator is they all earn millions for their shareholders. Are you a shareholder?
If you go on to the stock market and buy a share of that company, then you are a shareholder. If you purchase a product from one of these companies’s then you are NOT a shareholder. You are a customer and their mandate is to make money for the people that own the company (the shareholders) not the customers. Don’t get me wrong it is better for them if they make you some money also but you are definitely not first their first concern.
This is a very important thing to understand as some of the products they sell you have a slim chance of ever making you good money. They have a huge chance of making the company money. Is this illegal, no? It is the same as if you go to the grocery store and buy ice cream. The grocery store’s main purpose in life is to make the owner of the store a profit. Second is to provide a good enough service that you keep coming back for more ice cream. You take the ice cream home, it is in a nice container and tastes pretty good. You get a good feeling from it and think the grocery store is okay.
Well you go into an investment company and they sell you an investment. You get a really nice folder with all kinds of big numbers. You get a contract with all kinds of big words. The salesman, AKA your “financial planner" says it’s all going to be great, you are doing a super thing for your family. Just for fun ask that person their net worth.
You go home with all this paper work and think, “wow that was pretty good. I am on my way to the good life. " You put the paper work into a drawer and never look at it again.
What happens when the value of your investments go down? Normally the “financial planner" gives you a call and says, “don’t panic now is a good buying time. " Heck, why did they tell you to buy before then if this is now the time to buy? It is kind of a catch 22. You will likely need to use a “financial planner" to buy some of your investments, if you do it is up to you to know what the heck is going on. It is your money and you are the only one responsible for its value.
This is one reason I suggest people get to know one type of investment and become well informed about it. Then invest in that market segment, by whatever means makes the most sense to you. I know a person who is wealthy selling old china teacups on-line. Pick something you want to know a lot about and make sure there is a way to make money there and go to it.
Make sure you are your own best shareholder. Do your own research and make your investment decisions based on it. That way you’ll know you will be the number one customer. Be smart to be wealthy.
Did you find those tips on debt management useful? You can learn a lot more about how debt management can help you reduce debt here.