It seems that everyone in the financial industry has been poorly trained to a certain degree, myself included. Doesn’t matter if it is your stock broker, insurance agent, mortgage professional, etc.
Why do I think this?
In an article from January 2006 from CNN it was reported that Americans were the worst savers, compared to other developed countries. I also heard that 2005 the savings rate was actually a negative number. A negative number? Come on – what is the deal?
One of the problems that I see is that financial advisers are telling people to take care of the long term goals, like invest, before all else, in a retirement plan. One of the other problems is that people try to "keep up with the Joneses", when in reality, the Joneses are one paycheck away from bankruptcy. It is messed up, but not, in my opinion, the biggest problem.
While I do not like to put the blame on other people and think that individuals are responsible for their own choices, the biggest problem with our current financial position in the economy is that at the end of every money decision, there is a financial institution waiting. Companies like banks, mortgage companies, insurance companies, mutual fund companies, etc are not working in our best interest. I hope this doesn’t come as any surprise to anyone. They have millions of dollars of advertising and they intend to use it to get our dollars, at whatever the cost.
Have you ever seen a Money Magazine article? I am sure most have. I think they are hilarious. Every once in a while they give us an article that says "Now is the time to Invest in Stocks" or something catchy. Then you thumb through the same magazine and see an article telling you to invest in bonds, or CD, or gold, or some other investment that might or might not be in your best interest. The question is – Who is right?
The answer – Nobody, well maybe both. Or all for that matter.
The fact is, Money Magazine (and other media outlets) are in the business of building a subscriber list and selling advertising space. They couldn’t care less about yours, mine or anyone else’s financial situation. They just care about their bottom line.
Another problem is that most people do not spend enough time researching and planning their own finances. They spend 50-60 hours a week at work and the last thing they want to do is go home and worry about which bills to pay and how they are gong to afford that new boat they just bought. Plain idiocy!
Well, there are more factors – like opportunity cost. that I will get into in a future post. In the mean time, if you want to stay well informed, please subscribe.
Later.
