I have mentioned in some of my earlier posts my fondness for numbers since I was very young. That fondness extended to my adult life and particularly with regards to money. Now why money, one asks? Why not measure the square feet in one’s apartment or count the number of steps in a stairwell? Actually the answer to that is that having already done those particular things and long since having exhausted all possible avenues of things countable I stumbled upon the last option available. Money.
Money is a concept, subjective in nature. The psychology of nations drives the value of money. The most fascinating thing however is how money grows or gets devalued depending on what an individual chooses to do with it. What I mean is, for example a person keeps accumulating his savings in a bank for 10 years at an interest rate of 3% a year. Now you may say that the person will end up at the end of 10 years with a surplus amount of money if he diligently saves and takes not a penny out. Not so if inflation has a say in these matters, which it usually does. Inflation is what causes your money to buy lesser and lesser of something as time progresses. So at a 6% average rate of inflation over the same 10 years period compounded will mean a serious loss of savings by this person. 6% is not an unreasonable number as the rate of inflation these days is hovering in the double digits. A scary prospect for employed people on fixed salaries. Having learned all this at an early age I sought avenues which would beat inflation once I started earning my own money. And the best place for long term investments and a hedge against inflation according to the experts is the Stock Market.
Now you may have heard from your family members or an uncle who had put money in the markets and had lost a bundle that it’s a risky place and no good has come of investing there. Your friends would no doubt have seconded this opinion and in the face of such strong ‘facts’ you will of course conclude that since these are the people who you trust the most they would most definitely be giving you accurate information and not hand me down opinions. But the truth is one needs to ask oneself as to the factualness of information received. Even the information given by others keeping your best interests in mind may just not be what you needs warrant.
So it is my firm belief that a primer on understanding the financial markets should be a part of the school or college curriculum to get rid of the ignorance on this subject that is prevalent even in educated members of a society. This way people will be able to make good decisions for themselves when it comes to picking a company to invest in as opposed to taking ‘tips’ from the family broker who would have his own interests in mind and be least concerned as to the state of your finances.
I suggest people to have some information on the workings of the financial markets and especially the stock market if they want to build a future for themselves where they need not be concerned with the devaluation of their savings. The greatest fear for me is probably being old and poor, not knowing what happened to my money which i had so carefully ‘saved’ all those years I worked. No, that’s a scary future for me to envisage and I’d rather spend a little time learning today and taking risks today, knowing that if I fail I’m still young enough to get back on my feet and start all over again. Imagine being 60 and having to go to work instead of spending those years reaping the fruits of your hard work. No siree. My learning has already started and as a friend I implore all who read this to get started on the path to your own learning.