How much do you weigh? Do you wear glasses? I’ll bet you can answer these very basic questions about your physical health - but how much do you know about your financial health? Many of us have investments of some kind - especially if we are saving for retirement. The thing is, most of us don’t really know where that money is invested - instead, we give all our money to a bank, fund company or financial planner and trust them to make all the decisions. In short, it goes into a black hole and we keep our fingers crossed that we have enough to retire on and won’t be eating cat food out of a can in our dotage. Seriously - ask the average person how much Canadian stock they hold and chances are you’ll get a blank stare.
Now, I will admit up front that I am this kind of investor - I am really good at saving and putting aside money, but not so great at keeping on top of where it’s invested.
Then today I read this article about a former banker in New York, Gordon S. Murray who wants to change how most people interact with their investments. To do that, he’s co-written a book (with Daniel C. Goldie) to help investors take charge of their money.
Murray’s background is important here - he spent years selling investments to folks like you and me and came to realize that we’d be better off managing our investments on their own. In fact, we’d make more money in the long run. The book is called The Investment Answer - it was Murray’s long-time dream to write it and when he was diagnosed with terminal brain cancer he turned to Goldie to help make it happen.
The writers give five tips to investors who have their head in the sand when it comes their investments:
While I think these guys are oversimplifying the formula a bit (deciding between active and passive - especially in this market - is not an easy decision and even the top investors in Canada are divided on the subject) - they have one major point: most of us have our savings in some kind of investment and it’s up to us to understand or at least do our homework to know where our money is and how much we’re paying our advisors for their services.
Murray and Goldie’s book is great, but I think there are some smaller steps you can take to get a grip on your investments, before diving into the details. Here are just a few:
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