How can I begin to take charge of my own financial future?
I am a university student majoring in accounting. One of my biggest goals is to take charge of my personal finances and investments. I currently have an advisor managing them, however, I would like to be able to actively trade and manage my finances without that individual. With that said, I do not know where to start when it comes to investment management and independently dealing with my finances. I can analyze financial statements and have in depth knowledge on accounting, but I would like to read and study material pertinent to investing and independent wealth management. How do I start?
I think you start by taking charge of your life. Once you take charge of your life, you can take charge of everything in it, including your finances. If you concentrate mostly on the finances, then they will run you, instead of you managing them.
This is a very important notion for people just starting out in their financial career. When I first started, I read “Think and Grow Rich” by Napoleon Hill. It was a real eye-opener. It helped me realize how my success would really be due to how I thought. My self-knowledge, not my technical knowledge, would determine how far I would get. I could become the biggest expert in a specific field, but if I didn't become a master of myself, I would never achieve much with that expertise.
My experience over the decades has reinforced this truth. You have to know where in life you are going. Then your trading and investing can help you get there.
First of all, kudos to you for wanting to be a part of your finances. I'd start with the components of a financial plan (investments are a piece of it). My suggestion would be to involve your advisor in that process. He/she can teach you what they are doing and why. The advisor can add a lot of value by helping you with an overall financial plan, even if you eventually end up managing the investment piece on your own. Perhaps start small on your own and let the advisor guide you. Then build upon that. Keep learning. I recommend diving into a couple of books or magazines. Investing 101 by Kathy Kristoff and The Intelligent Investor by Benjamin Graham are good books to start with. Kiplinger's Personal Finance is a good magazine. Obviously, Investopedia is a good resource. There are thousands of articles on here.
Great question and one that everyone should be asking! I know that may sound strange coming from a financial planner, but you are spot on with your thinking. You should be managing your investments according to an investment strategy that you understand. Education is the most important requirement here and a wonderful site to gain this education is at www.diyfinancialfuture.com.
How can I say this and still earn a living as a financial planner? The reality is that once you begin diving in, you will quickly recognize that there is a great deal to learn. I'm not saying you couldn't learn it because you certainly can, but most people learn a good amount still end up missing opportunities or making mistakes. This is where I come in and offer professional advice without selling any products, requiring an ongoing relationship or requiring money management. Best of luck to you! Sincerely, Garrett
I am a little confused by your question. Working with a financial advisor is one of the best ways for you to take control of your financial life. A financial advisor should help you understand your financial goals, how you can work towards achieving those goals, and how to avoid missteps along the way. I would liken the experience to working with a doctor to improve your health, an attorney to address your legal issues, or an accountant to battle your tax questions. As an individual who is preparing to become an accountant, I hope you see the value that trained professionals can bring to the table. If you would like to conduct some additional research, I would suggest the Financial Planning Association’s Whitepaper Library, the CFP Board’s Let’s Make a Plan website, and Michael Kitces’ blog Nerd’s Eye View.
I have an accounting background myself, and analyzing financial statements is important especially when investing over a longer time frame. That said, and being in the investment business almost 25 years, I have come to learn that technical analysis and investor psychology as well as understanding how the markets work can be just as important.
So I would suggest reading investing and trading books also. I would start with "How to Make Money in Stocks" by William "Bill" O'Neil. And there are many other books as well.
Best of luck, Dan Stewart CFA®