The 5 Biggest Popular Misconceptions when it comes to Money
(PRWeb) January 14, 2007 -- Michael Fischer is an investment professional with over ten years of experience, the latter nine at Goldman Sachs. He has bought and sold billions of dollars of investment products on behalf of his clients and himself; and shares his expertise in his new book is Savings and Investing: Financial Knowledge and Financial Literacy that Everyone Needs and Deserves to Have!The 5 Biggest Popular Misconceptions when it comes to Money
1. This is a complicated subject
Reality: Saving and investing is not a complicated subject. What makes it complicated is that there are thousands of financial products and providers out there and so how do you choose, and that we only hear small soundbites about how things really work. If you start with the fundamentals - and the complete fundamentals - of how finance works and has worked for hundreds of years, everything else is just a fallout from that and can be assessed based on the basic understanding. The key is to start with the basic understanding.
2. The stock market is like gambling - it's a lottery
Reality: Securities markets such as stock markets and bond markets are in fact places where interactions between users of capital (companies and governments mainly) and providers of capital (investors) can take place. They allow users of capital to raise money and have access to investors, and they allow investors to make capital available with a view to getting a return. This has been the key to our successful Western civilization for hundreds of years, and these markets have offered good returns and each have characteristics worth understanding.
3. Being in debt and consuming beyond your means is ok because it seems everyone is doing it
Reality: The reality is that some statistics estimate that 6 out of 10 Americans is in debt - that however does not make it good. In fact, often when everyone (or a majority) is doing the same thing, some of the worst results come out. Look at the stock market after March 2000 when so many people were bullish on technology stocks.
4. Saving and Investing equals financial sacrifice
Reality: Having debt that is growing at high interest rates, for example in the form of credit card debt, means financial sacrifice, and in fact an ever growing financial sacrifice, because the debt is getting larger and larger. Saving and investing typically involves growing your money and therefore more financial freedom, and in many cases means putting money aside that is immediately larger because of tax incentives that governments give us to help us stay out of trouble.
5. I don't need to know about saving and investing because I can ask a professional to do it
Reality: Saving and investing is too important to blindly hand over to someone else. Firstly, you need to be able to develop your own personal plan ultimately depending on your goals and circumstances. Secondly because it is so prevalent and spoken about in the media continuously, not knowing anything about it means being shut out form a large part of the world around us. Thirdly, most financial professionals are compensated based on the products they sell, not where you end up in 20+ years, so you need to know something. And lastly, because even with a professional, you can only have an intelligent conversation with them if you have some knowledge yourself.
Michael Fischer is available for interviews.
Please contact Tiffany Alvarado at 212-593-6467 for an interview or a copy of the book
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