Learn Investing--Ask Your Kids
Your kids are likely far better investors than you. The seek to learn investing on their own so as to avoid the dependence and fees of using a professional.
Young millionaires disparage the value of financial advisers per a recent study by Spectrem Group. The study summarizes that millionaires under the age of 45 prefer self-directed investing and they believe the services of professional advisers to be over-priced.
The study polled three different age groups: age 41 to 45, 35 to 40, and under 35. The youngest group was most against using a financial advisor; 58% of respondents between ages 41 and 45 found the offerings of a financial advisor too expensive while an overwhelming 74% of those under age 35 felt advisers were over-priced.
Younger investors find the financial information they need on the Internet, according to Spectrem. This means they are self-confident, self-taught and self-learners. These are the traits needed for learning to invest well.
The thing that young millionaires have in common is that they are self-learners. They know that they can easily learn investing from the Internet, magazines and books what any financial advisor can tell them. Rather than pay someone to lose their money, these young success stories realize they can learn to invest on their own and have no one to blame for results. And they can do so without paying fees.
They know that from the plethora investment choices, there are only two: stocks and bonds. Every other product is just some combination or derivative of stocks and bonds with a 70-page prospectus hiding fees so that the brokerage firms can take you to the cleaners. If you do a little reading (yes, read the prospectus), you will learn how many fees are buried in the products manufactured by Wall Street and you will realize that all of these products are simply some version of stocks or bonds. Learning about investing is simply reading.
It's unfortunate, but of all financial advisers, brokers/wealth managers, whatever you want to call them (or they call themselves), maybe 10% to 15% can do anything of value for you. The rest are just salesman of products they don't even understand. They have never read the prospectus for the junk they sell or understand if it's even good for you. If you want the best results, learn investing and take your investment education into your own hands.
Your kids have learned about investing and know that it's probably best to do their own. A good lesson.
I think that all these comparison sites that have popped up have made young people happier to make their own choices. Paying someone to do that now seems like a waste of expense. The internet has really given freedom to choose yourself
I agree, brokers can be sharks! There is also the point that the younger you are the more intuitively in contact you are with trends. I know someone will probably thump me for saying that!
Depends on your kids. Mine are as smart as a whip but can't seem to grasp anything past RRSP's and blue chip stocks.
Haha, this is so true. I am gonna ask the kinds next door... I might learn a few tricks from them on investing! Gonna learn from the kids.
I love the opening line "Your kids are likely far better investors than you"... it speaks volumes lol
If more people simply invested something, somewhere instead of thinking it's too complicated...everyone would have retirement savings. Fear of not knowing what to do, or where to put the money, disables people action of simply saving money.
That is a very interesting point. I am under the age of 35 and have been mulling over the idea of just investing on my own. I'd rather reap the rewards and take the responsibility for the failures myself rather than pay someone else to do it.
thanks for this great article. I personally, will never pay any professional fee to my stock broker. If I do, then this information age will be of little value to me. The internet has bridged that gap between a professional investor adviser and a mediocre investor like me. the difference between me and my stock broker is rather a thin line.
I agree with you about most of the financial brokers are more to salesman than adviser. Some may be able to advice you theoretically, but the ultimate goal for them is the commission.
I came from a securities background and I can say that less than 5% of sales people in that industry realyl care about their clients making money.
Generally speaking, great post. The thing that slightly worries me is the idea that the younger generation have good knowledge as they have found info online... Isn't that in itself a bit worrying? I mean, why trust a financial planner less than financial info posted online? It seems to me that in the latter example, the information we receive is less personal and thus less trustworthy?
I guess the phrase, the great minds of today teaching the great minds of tomorrow, really applies here. It is true that we are getting smarter, retaining more information and some of us have even managed to keep a bit of common sense under our hats. But also never have our opinions been more easy to voice over the world, for instance, 58% of respondents between ages 41 and 45 found the offerings of a financial advisor too expensive while an overwhelming 74% of those under age 35 felt advisors were over-priced. Very unique example. Good post!
Sounds like it could be true, I have done alot better then my parents on the market, I totally agree with you.
Financial advisors nowadays are getting qualified and professional now.
They arent just mere saleperson you can find on a street. They were being trainned and they are not required to get license(S) in order to be fully advisoing clients in terms of investment. I learnt this from my job interview back in Hong Kong.
I didnt take the job offer tho.
This is really true. I really like the idea of working together as a family. I find that my son is still a little overly risky and hasn't experienced the weight of that yet. So I am able to bring that to the table. But his energy and ability to research investments, business ideas, etc with the internet and be self-taught is something I cannot do at my age. So by being able to pool our resources, intellectual as well as financial makes us much more powerful together than separately. And I just flat out don't trust financial advisers to care for my money the way I do. Nor do I trust that there can be much profit margin after the fees they charge!
This is like better than actually getting advisers. At least if you make investing mistakes by yourself, you only lose the money you invested. Hire an adviser, and if you both make mistakes (come on, it can't be an all win situation.) you'll end up losing the money you invested, and then some(Hello hidden fees!)
Working together as a family is a really good idea. But of course, it would not work out for everyone, as all families don't get along as well. Over to the theme. If you want to learn to invest, why would should you hire an advisor? Think about it, if he is as good as you think he is, he wouldn't be an advisor, he would be in the stock market, not learning newbies how to invest for a small fee. If you really want to learn about investing you should try to get some contacts within the business, which is always an important thing. And when I talk about contacts I mean people who actually earn big time investing. If you can't get in thought, read. Knowledge is power, even thought it isn't as good as tutoring reading can be useful.
I agree that the majority of time it's useless to have an advisor - especially since a lot of good information is easily accessible on the internet. You just have to be able to recognize the good advice from the bad.
You know, as Internet savvy as kids are today, you bring up some really valid points. My kids have no problem doing research and finding their way around things.
I think working with your kids on retirement may provide another bonding experience that everyone can benefit from. You've really given me plenty to think about.
One advantage about investing on your own today is that you have access to a wealth of information and tools. Every aspect about a company, its industry and its marketplace is at your fingertips. But that is the negative as well. It is not as easy as just doing the analysis. The markets are often irrational!
Sure, the young people are slef-learners, but that doesn't necessarily mean they're better at it. What with the economy the way it was in the early 21st century, any chimp could make money. I'd like to see how they're performing NOW.
I agree, brokers can be sharks! But going with those who have no knowledge of investing or markets is just as dangerous. But the younger generation is more connected to everything more now than ever before, so it can turn out pretty well, especially with new tech IPOs and such.
I completely agree with the observation by Nassim Taleb in his book The Black Swan in which he states that stockbrokers, economists, financial forecasters, risk experts and personal financial advisers are examples of "experts who tend to be ... not experts".
At last they are being seen for what they really are, the story telling middlemen of a massive financial con scheme.
My dad is in his fifties and he's about to retire. He's not much of going out, and barely uses the computer. He's thinking about starting a business or maybe invest in something in order to generate incomes. But... wait, how would it be possible for him to know what to do? I told him to help him. I'm 25 and I live the present, and I know what's hot and what's not. I hope he will tke my advices.
Thanks!
hey, i agree with your position and thoughts, I think family work would be much creative and the decisions made by our kids would probably be a huge achievement what will get the money. Younger investors can do things much faster and in concrete conditions and we know that it's one of the main factor for success in business.
I agree with you about most of the financial brokers are more to salesman than adviser. They must first think of them selfs and make money for their family and after that, they think of your benefit!
HI
Great information in this post and I think the youngest group was most against using a financial advisor; 58% of respondents between ages 41 and 45 found the offerings of a financial advisor too expensive while an overwhelming 74% of those under age 35 felt advisors were over-priced.
The younger generation can afford to be aggressive in investing given that they still have time to recover if their investment lose.
So, to ask for their investing advice may not be a sound investment advice for our age.
young one's now act big so they tend to learn on their own, but that is not bad in a lot of ways, in fact some good results may occur like self learning as you have mentioned. but wouldn't this article make them act like... you know "bigger" but it seems that it was true as you have provided some solid sources and i too am a young individual learning on my own. and offcourse as a retired individual you can only rely on those who can still ride the present flow of society
I very much agree that financial advisors are more salesmen of their own products. While that may be OK in some instances, the failure to provide better alternatives besides what they are pushing is the real shame. I guess the really good ones are so expensive they only have time for the richest clients.
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Good point!I do agree that younger investors are self confident, self taught and self-learners.They are able to play smarter because of the better learning and of course through the help of internet.Internet could provide a lot of good information that we needed especially about business and investments.The good thing about it is that we don't need to hire or pay a financial advisers if we want to know some information.
Thanks!
Online investment sites are replacing the traditional need for investment advisors. Additionally, youngsters are likely less concerned with making safe investments. They can put their money into more high risk -- high return type of investments