Not many people really understand investing. We are supposed to manage many of our own investments and yet for the majority, we’ve had no formal training in how to do that. The younger generation can’t even add up without loading up the calculator app on their smartphone. With this general lack of financial wherewithal, it’s not surprising that whether as individuals or at the corporate level, the ability to connect how the world economy, business, and investment markets are tied together is lost on most people.
Let’s look at how knowing more about finance and the economy can improve your personal fortune and possibly lead to a new career too.
Upping Your Investing Game
Whatever level that you’re at with investing, you can always get better. Whether it’s reading up on what Jack Bogle of Vanguard Inc. has to say on the subject or following the latest annual newsletter from the Oracle of Omaha himself, Warren Buffett, there’s always something new to learn.
Reading good investment books gives you a grounding on what you need to know. It’s difficult to get through the corporate finance books as they’re pretty dry, but ones like the Tim Hales’ books, Smarter Investing, is worth a read for British investors. Another one, “Bogleheads,” by followers of Jack Bogle of Vanguard, is also a good one for American investors.
Learning About Active vs. Passive Investing
One of the main considerations of investing techniques for both corporate and personal investing is whether to invest into companies, real estate, and other stocks on an active basis or a passive basis. With active management, individual stocks are selected based either by you or a fund manager with the goal of besting the market index for that asset class (e.g. the S&P 500 index in the US of 500 of the largest companies in America). With passive investing, an index fund is purchased that tracks the value of the index by owning almost all components of it. People who buy index funds tend to believe that active management either fails to beat the index net of costs and taxes or it’s too difficult to pick a market-beating manager before they quit. With indexing, the returns don’t incur high fees, which increases the likelihood of a positive return.
Taking Things to the Next Level
For the adventurous who feel they are up to the challenge of learning formally about finance and the economy, then the online master of financial economics degree at Ohio University should be of interest.
It’s an online MFE program that covers the equity, fixed income and derivative markets in some depth over a structured course of study. The course is entirely online, which enables you to study around your lifestyle without interfering in it. Some people will find it valuable in its own right and not even wish to use the degree to advance or change their career. But, perhaps the added value not only is in learning to manage your own investments better but you can also gain a highly-paid role in an interesting company with a nice boost to your lifestyle and your personal bottom line too.
There are pros and cons to studying investing in your own time without a structured course. It’s difficult to understand the important aspects without lecturers to clarify key points and lend their knowledge and expertise. This is something you cannot get from reading a dry investing book and make the studies easier to complete too.