Financial Literacy Leads To Financial Success
Remember the times when you were told to master your three R's--Reading, wRiting and aRithmetic. Mastering them leads to literacy, the older folks would say.
The dictionary defines literacy as "the quality or state of being literate, especially the ability to read and write" or "a person's knowledge of a particular subject or field".
So if literacy means a person's knowledge of a particular subject, do trading beginner ever ask themselves how financially literate they are?Most of the time, the reason why got into stocks trading is to find an alternate source of income. The ultimate goal is to achieve wealth, lots of it. Unfortunately for some, it eventually turns out to be the primary way of wasting their hard earned money.
As we look back to our education, we eventually realize that there really was no course in school that taught us how to create wealth. So all things being equal, it logically means that beginner traders are all financially illiterate. If all those beginners are financially illiterate, what do you think their chances are in achieving success?
We go back to what our elders once told us: knowledge is power. For investment beginners, it specifically means financial knowledge. With financial knowledge in their possession, they will have the power to create wealth for themselves.
Here are three easy tips on how to feed your financial knowledge:
- Aside from simply knowing the general concept of "buy low sell high", learn the nuances of stock trading. These may include knowing:
- are you investing for the short or long term?
- which stocks can be held either for short term or long term;
- what are the risk factors involved;
- what are the realistic profit margins;
- Keep up-to-date with the latest trends, information and technologies. If you have decided to be a short term player, then these factors could be very crucial to your success. Once you learn to discern which of the latest systems work and which do not, leave the antiquated methods behind.
- Overcome your fears and stay on track. You will soon learn that any form of investment involves a certain amount of risk. Overcoming your anxieties is part of the learning process. Once you have mastered this part, you will find that your decision making becomes clearer and more solid.
A person who acquires a lot of money but without any financial ability is bound to find that money gone very soon. A true-to-life example of how financial illiteracy can lead a wealthy person down the road to ruins is that of Mike Tyson. In his prime, he amassed a fortune of about US$300-million just from his boxing earnings. It also took him about the same amount of time to blow it all.
If you are determined to pursue the "thrills" of day trading or investments of whatever sort, just keep those three tips in mind. If you find that you need further explanation, consult someone who has gone down this road before such as a broker or hire a trading coach or mentor. Many of today's coaching programs allow you to open a trial account first.
Money comes and money goes, but financial literacy is for keeps.
