You’re Not an Expert and You Don’t Speak Finance

Many people are not aware that 401(k) investment plans for retirement came into existence in the early ‘80s. Before this, only people with large amounts of money actually invested in the stock market. Since then, most Americans have become at least somewhat familiar with what a mutual fund is, since it’s the vehicle used in most 401(k) plans. Here’s an interesting tidbit: When the markets declined in 2000, 2001, and 2002, the most common lawsuits against employers were claims about the lack of education on 401(k) plans. Employees claimed they were not up to speed with how those types of investments moved over time, and chose to blame someone else for not allocating their investments properly. In a number of companies, the employer will now have a financial professional come in to educate staff members on their 401(k) money. But what about becoming better informed about the rest of your financial world?

I was not brought up with money, but I am blessed to have learned how to grow wealth for myself and for others, because I know both sides of the coin, so to speak. Now, I can converse in two languages, English and financial jargon. Financial jargon is that gibberish-speak financial folks use when talking about their products and services, numbers, rates, percentages and the like. Not understanding your financial advisor is a big hurdle to get over, no matter how much or how little money you have. This is a perfect example of a crab you have no control over whatsoever — unless you have a translator handy.

Another common obstacle is all of the options that are available to you: investments, savings, insurance, etc. I find it easier to categorize financial products according to your needs. I break them down into buckets. You have short-term, mid-term and long-term buckets to put your money in. I’ll get into more detail about this in Chapter Eight. What’s important for you to understand right now is that the myriad financial products that are out there don’t have to be as mystifying as they’re made out to be. Again, it’s important that you work with a financial professional who translates financial-speak into terminology you can identify with. You don’t want someone to make your eyes glaze over when it comes to chatting about your financials.

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