True financial freedom begins with financial education.
You know… all the stuff we weren’t taught in school.
When was the last time you used the algebra, geometry, calculus or trigonometry you anguished over in school?
For most of us, it’s never.
People who can do higher math—and love it—are genius to me. The universe is constructed on mathematical and principles, such as the Fibonacci Spiral or the Golden Ratio. Clearly that’s their gift and there’s undoubtedly a need for it in certain professions. However that’s not the case for most of us. It’s the rare student who recalls and uses most of her high school and college math, unless we’re math teachers, engineers, architects and the like.
Today’s students often have a sense that they’re wasting their time in school. Most stick with it because they have to get good jobs or because of parental pressure. Some because of their social life, where classes are the interruptions between social interactions.
But there’s a new breed of education growing exponentially, thanks to the World Wide Web placing the knowledge of the world at our fingertips. There are professions that will always need formal education, and yet even that format needs changing to keep up with this knowledge age, and not only the format, but also the overall approach to the learning process.
As Robert Kiyosaki says in his latest book, Why “A” Students Work for “C” Students and Why “B” Students Work for the Government, our educational system was created to serve the industrial age employee needs.
Education has the second longest lag time of any industry. “Lag time” defined as the time delay between a new idea being proposed and its adoption. The US school system current lag time is 50 years!!
The lag time in education means that children starting school today will be grandparents before the educational system adopts the changes [needed now]. Robert Kiyosaki, page 23, of Why “A” Students Work for “C” Students and Why “B” Students Work for the Government.
Hmmm… shouldn’t education be leading adaptation rather than lagging so far behind?
Knowledge is the new wealth. Robert Kiyosaki
Education comes from the word ‘educe’, which means to ‘draw out’. Yet our current and longstanding education system seems to define it as putting things—ideas, facts, information—into our kids’ heads. Clearly this is a paradigm that needs to shift. Judging by the continuously growing number of homeschoolers, unschoolers, hackschoolers and private, magnet and charter schools of all kinds, a move is afoot at the grassroots level.
There’s a glaring gap between what we’ve been taught versus what we need to know.
When was the last time you needed to figure out how to make more money, or make your money grow more than it has? When was the last time you worried over whether you’d have enough for retirement, and even how much you would need? How about investments and the net bottom line you’re actually earning on your mutual fund or managed portfolio after all fees, including taxes and inflation are taken into account?
For most of us, it’s OFTEN, or should be.
So where do you start? And how can you know if it’s a reputable company and not a Ponzi, or Madoff. We’re definitely not against financial institutions or money managers. We are for ongoing education, and asking tough questions on a regular basis.
The best financial education out there is not found in school any more. If you doubt that, consider how many wealthy professors you know of.
How do you know where to turn and who to trust? This can definitely be a challenge. My husband and I have lost painful amounts of money investing in supposedly trusted advisors to prominent, world-renowned financial and educational gurus.
We’ve lost money in real estate investments as well. In both cases, we were amongst some highly successful investors and hedge fund managers, far more experienced than us, and yet they also lost large sums. So there’s no guarantee, and it can happen to anyone, but the more educated you are, the less the likelihood of loss.
We did our due diligence in the real estate deals, but with the financial advisors, we tended to rely on their reputation and associations. Here’s our first critical lesson:
If your intuition nags you about anything at any point, listen to it!
Instead, we doubted our own inexperience and trusted those who—surely—knew better than us, and who had already vetted their sources. But the fact is, they—those highly experienced and highly successful investors—lost money as well. Some through issues of negligence and some through outright fraud.
So, when it comes to investing and money, there’s no one way that’s right for everybody, and there’s no substitute for doing your own due diligence. Don’t worry about looking stupid asking dumb questions, especially if you’ve already done all the upfront research and education that you can. I can wear out a prospect with questions, and I’ve come to be okay with that, because when I didn’t… when I stopped asking even when there were unresolved questions, or something nagging in my mind, we inevitably regretted the investment. Get the big picture, and identify all risks and exit strategies as best you can, and never react to urgent, “act now or miss out”, investment opportunities.
There are many resources for self-education through courses and books, so how do we discern which of these to study and follow? Our first criteria is to confirm that these experts are prospering primarily by doing what they’re recommending and not by selling advice only. They need to be prospering by following their own advice.
“The mutual fund industry is now the world’s largest skimming operation, a $7 trillion trough from which fund managers, brokers, and other insiders are steadily siphoning off an excessive slice of the nation’s household, college, and retirement savings.” — Senator Peter Fitzgerald, co-sponsor of the Mutual Fund Reform Act of 2004 (killed by the Senate Banking Committee). Excerpted from chapter 2 of Money, by Tony Robbins.
There are the fraudulent and negligent, but I believe that most are not bad people. Rather, it’s just that so many of financial managers and planners are teaching and doing what they’ve been taught, which may or may not be what’s best for you. Too often, the bottom line—after all coins fall into place—is showing a lower return on investment (ROI) than the S&P Index, and hardly a break even after factoring in inflation and, of course, those “minor” management fees.
Are you working for money or is your money working for you?
There are certain things we all need to learn to do to keep ourselves healthy and fit. We’ve learned which foods are healthiest and that exercise is essential. We learn that we need to stretch, drink ample amounts of fresh water, and possibly take specifically prescribed supplements. If we don’t do these things, our health suffers. It’s simple logic and commons sense.
What then have we learned about how to care for our financial health, and are we doing it? Do we know enough, or are we relying on doctors to prescribe something for us to follow?
We wouldn’t we go to a dentist for a back ache, or to a chiropractor for a toothache, would we? We realize that doctors are trained to prescribe medication over nutrition—most receive little to no nutritional education still—so we know by now if we’re seeking prevention over disease and treatment, we need to seek diet, exercise and more natural preventive remedies. Well, it’s the same thing with our finances.
Financial health is a mental exercise.
If you go to a financial manager, or company who manages financial portfolios, they are not trained to educate you. They’re trained to manage your money. It’s not in their best interest, nor that of their firm to educate you, on how to manage your own money and ask the hard questions about their management. This is not a criticism, it’s just business for them.
But here’s the thing we’ve observed, and it ties in with what Robert Kiyosaki of Rich Dad, Poor Dad fame, has taught for years, and a story told by Dolf de Roos, international real estate and business success.
Have you’ve noticed, that many financial managers selling their services, are not wealthy? Others, who may have discretionary income to invest, have actually admitted that they’re not investing their money the way they’re investing their client’s money.
“This crisis begins when our children enter school, pending years—sometimes decades—learning nothing about money and being taught by people who know little about money.” Robert Kiyosaki
It’s akin to going to a doctor who smokes, or to a personal trainer who’s over weight, or a dentist with bad teeth. We have to wonder if they’re the ones who can help us achieve our goals.
There are sure to be exceptions in the financial services arena. Those are the ones we should seek out to learn from and invest with, but first, we need to ask hard questions.
“Most schoolteachers [and financial advisors], are great people. The problem is that most teachers and parents are products of the same [outdated] educational system.” Robert Kiyosaki
It’s critical to learn about your financial advisors before you send your money off with them.
If you have—or had—a teen daughter going out on her first date, think of the hard questions we might ask her and her date. As parents, before we sent our kids off to a friend’s house, we knew that friend or learned about them first.
QUESTIONS TO ASK YOUR FINANCIAL ADVISOR:
Remember, you are interviewing your prospective financial advisor to determine if they are qualified to handle your money based on their performance and demonstrated capacity to generate wealth… to grow money from money. This is not a cocktail party polite conversation. This is a “job interview”, and you are the employer employing them to grow your wealth, not just “manage” it.
Are you invested in the same vehicles you’re recommending for your clients?
- What percentage of your portfolio do you have invested in what kind of financial vehicles?
- How do you define financial freedom?
- Are you financially free now?
- If not, when do you expect to be and how do you plan to get there?
- If you could only choose one investment strategy right now to generate the greatest amount of wealth safely, what would you choose and why, and what kind of ROI does it have?
- Do your parents have this (financial product you are recommending)? If not, why, and what do they have instead, and why?
What questions would you add to this list? Please comment here at bottom, or share on the Best Boomers and Beyond Facebook page and we’ll add them to our list.
Here at Best Boomers and Beyond, we’re all about shifting paradigms. Remember how we all started with that in the 60’s and 70’s? Most of us were about embracing the new frontiers and building our lives around more liberating concepts for a new world built on the solid foundation of the best of the past, while rejecting what wasn’t working any more.
We believe in questioning everything. If something doesn’t seem right, we keep asking. We ask this of everything and everyone. We ask ourselves first and foremost, and then we ask about everything else in our lives, in particular the societal assumptions and indoctrinations that have conditioned our thinking.
We are about focusing on solutions over problems, victories over defeat, and perpetually assuming we do not have all the answers. In fact, the more we learn, the more we realize there is to learn, and how exhilarating is that journey of discovery.
Growth is not static. Change is inevitable, and what worked yesteryear may not work here. Many financial tools follow old rules, but today’s economic landscape requires an entirely different approach.
We’ve found through our research and auto-didactic journey that the best education comes from outside of the mainstream. Some of the programs and books we’ve found to be good, include, through such courses as that offered by Alan Ellman of The Blue Collar Investor, Phil Town’s course and books, Rule #1and Payback Time, and Tony Robbins latest book, MONEY Master the Game: 7 Simple Steps to Financial Freedom. Tony wrote this because of becoming increasingly aware of the tremendous gaps in financial education and made it his mission to turn that around.
For the be-your-own-bank or infinite banking concept and shifting financial paradigms, tune into the Best Boomers and Beyond interview with Patrick Donohoe of Paradigm Life. (Interview will post 2/4/15).
These are just a few, and we’ll be adding more over time. Meanwhile, please share which programs you’ve studied that are good and why you like them, so we can feature these also.
If you’d like to write an article on your own financial journey or financial tools and programs that work, please apply to write.