Investing 101: Before You Start Investing Money

Doesn’t it make sense to learn to invest (some basics) before you start investing money for real? Maybe a course called investing 101 or personal investing would be helpful. Here this retired financial planner relates a story and then points the new investor in the right direction, so they do not start investing uninformed Tessla.

In the dean’s office of one of the largest universities in America, I recently asked if they offered to invest 101, personal investing, or any finance course where the student could learn to invest. “After all, we all need to start investing money someday, and it is much to one’s advantage to be informed vs. uninformed, isn’t it?” When told, that was my response, “no, or at least I can’t find one” by the dean. I was informed that they had well over 50,000 current students enrolled and offered THOUSANDS of courses in the various colleges throughout the university. But he could find no course under the heading of personal investing or investing 101, and he was in charge of the curriculum.

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We spent about an hour together searching and were both laughing out loud at what WAS offered. How about a course in “the art of falling”? It’s offered. Investing 101? Which college in the university would offer such a course? “The athletic department is huge here; maybe they could help,” I suggested. After all, professional football players make big money. They need to learn to invest money (if their career is short) and start investing early. I knew a few players when I was a financial planner, but they tend to procrastinate when the money is flowing in like most folks. They’re too busy earning it and don’t have the time to learn to invest.

The truth of the matter is that I don’t find it funny that it’s difficult to find a down-to-earth, practical course that most people could truly benefit from because as a new investor, you need to learn to invest money before you start investing for retirement or any other financial goal. As a new investor, you may not be able to find a financial planner you can work with or afford. Even if you found one, do you really want to start investing money with him or her without first getting your feet wet in the basics of personal investing? Let’s start at the beginning.

Before you get into financial concepts like asset allocation and strategy, you should first learn the basics: investment characteristics. How can you compare various alternatives to determine which best suits your needs, financial goals, and comfort level? In other words, you need to decide what you are really looking for. And you need a list of factors to consider before you start investing money. For example, do you have a long-term goal like retirement, and are you willing to accept a moderate risk level? If so, there are numerous investment alternatives to consider, and you can also get tax breaks.

On the other hand, if you have a shorter-term financial goal and might need access to your money at a moment’s notice, that’s a totally different picture. It would help if you matched your financial wants and needs to the various alternatives that have characteristics best suited to your personal investing goals. There is no single best choice for every financial goal. It’s a matter of giving and take. I have a list of 5 factors you must consider and a few other things you should consider before deciding. This is basic investing 101. Whether you are a new investor or you’ve been at it for a while and have never really taken the time to learn to invest – you should learn the basics.

This is the first in a series of investing 101 articles I plan to write. In my next article, I plan to put my list of characteristics you need to consider before investing money in black and white. Don’t feel bad if you are a uniformed new investor (or a want to-be). Do something and learn to invest, starting with the basics.

Once you have a handle on a few basic financial concepts, you can start investing with confidence. Once you learn to invest, you can reach your financial goals. If you think I’m trying to build your confidence, you are right. Stay tuned to investing 101 as we get back to basics. No offense to anyone at one of THE largest universities in the country, but there’s a void out there, and I plan to fill it.