The charlatans in the financial markets media have been spreading fear about Chinese politics, and how they're devaluing their currency right now. Do you know someone that's been taking part in the hand wringing? Are you suffering from whiplash while watching your stock portfolio over the last 10 or 15 days? I find that the best way to track a market is to have at least some money invested in it. I've watched the limited stock portfolio I have do the Harlem Shake over the past few days, and it's interesting to read all of the stock pundits' reactions.
My knee jerk reaction is to come on here and tell everybody that they need to take control of their portfolio. "Sell your stocks and buy real estate!" But I'm not sure that's my real goal. More than anything, I think we need to understand our portfolios. If your securities broker sent you an email this week telling you that China is launching a hostile attack via their currency and markets, make sure that they clarify for you what that means. How does that change their overall outlook on the market? What can you do in the next 3, 6, or 12 months to protect yourself and be ready if it gets worse? Sure, you can't control the stock market in the same way you can affect the real estate you own, but we've seen that real estate is subject to market forces just as much as anything else. Figure out what your risk tolerance is. Limit your exposure, and only invest in things that you understand. Don't understand how to protect and grow your net worth using real estate? Give me a call. Let's talk.
Wednesday, August 12, 2015
Monday, August 10, 2015
Financial Education
The topic of financial education has been on the front of my mind quite a bit lately. As I work with a lot of potential home buyers and sellers I find that there has been a lot of misinformation spread and there are a lot of misconceptions that are being perpetrated by people in the news and media.
I believe that lack of financial literacy is one of the primary causes of the stagnant poverty levels and slow wage growth in the country. I remember sitting in a class in grade school where the teacher was telling us about the stock market. She said that it's unlikely that your stock portfolio will outpace inflation as time goes on, so the risks of investing in the stock market were simply not worth the rewards. The fact that she was wrong is not what frustrates me. Sadly, she might've been speaking from direct experience. Her losses in the market were probably more caused by a reluctance or inability to take control than by poor money managers.
Owning real estate takes work. It is naturally less passive that investing in stocks. Even if you are not the one unclogging toilets, you probably know the name of the company that manages your property and does that for you. When you buy real estate vs. stocks, you're much more likely to pay attention to the purchase process, and the condition of the asset you're buying. I understand that it is tough to manage, but it's not as tough as some think - and per hour, sometimes it's better than any side job you can get.
I have met so many real estate investors that didn't understand real estate before getting in, but stuck with it and learned a ton in the process. That's how I got started too! That said, I think there is a much better way. I feel that lack of good financial education in schools is keeping a whole lot of people out of the market unnecessarily.
What are your thoughts? Are we in need of better financial education in grade school & college?
I believe that lack of financial literacy is one of the primary causes of the stagnant poverty levels and slow wage growth in the country. I remember sitting in a class in grade school where the teacher was telling us about the stock market. She said that it's unlikely that your stock portfolio will outpace inflation as time goes on, so the risks of investing in the stock market were simply not worth the rewards. The fact that she was wrong is not what frustrates me. Sadly, she might've been speaking from direct experience. Her losses in the market were probably more caused by a reluctance or inability to take control than by poor money managers.
Owning real estate takes work. It is naturally less passive that investing in stocks. Even if you are not the one unclogging toilets, you probably know the name of the company that manages your property and does that for you. When you buy real estate vs. stocks, you're much more likely to pay attention to the purchase process, and the condition of the asset you're buying. I understand that it is tough to manage, but it's not as tough as some think - and per hour, sometimes it's better than any side job you can get.
I have met so many real estate investors that didn't understand real estate before getting in, but stuck with it and learned a ton in the process. That's how I got started too! That said, I think there is a much better way. I feel that lack of good financial education in schools is keeping a whole lot of people out of the market unnecessarily.
What are your thoughts? Are we in need of better financial education in grade school & college?
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