How to Know With Absolute Certainty if You Should be Investing in Mutual Funds

When try­ing to under­stand what sort of invest­ment strat­e­gy is best, a lot of peo­ple stum­ble across the “com­mon wis­dom” of invest­ing in index funds and then ignor­ing their account.

I believe that strat­e­gy is a cop-out. It’s a patron­iz­ing way of say­ing…

“you’re too stu­pid to under­stand invest­ing, the mar­kets, and wealth build­ing so here’s a sim­ple­ton’s way of invest­ing”.

Of course, I’m not being com­plete­ly fair. Index fund invest­ing has some use­ful­ness & is appro­pri­ate for some peo­ple and some sit­u­a­tions.

Like when you’re too une­d­u­cat­ed to buy the actu­al stock you think you are. If you want to buy Twitter but instead buy Tweeter Home Entertainment Group you should be invest­ing in index funds. PS — Twitter was still a pri­vate com­pa­ny at the time.

If you think that does­n’t hap­pen very often, shock­ing­ly (to me at least) it hap­pened again just this week when Google announced they’d buy Nest. Nest is a pri­vate com­pa­ny but that did­n’t stop peo­ple from buy­ing Nestor.

People who buy the wrong com­pa­ny when the com­pa­ny they want is pri­vate and can’t be trad­ed any­ways should absolute­ly be invest­ing in mutu­al funds.

The Importance of Financial Education

This is why I real­ly believe that a good foun­da­tion of finan­cial edu­ca­tion is crit­i­cal for invest­ing prop­er­ly.

There are many ways to be suc­cess­ful, but by hav­ing a strat­e­gy to frame your edu­ca­tion and to mea­sure you suc­cess, you make great strides towards build­ing long-term wealth for your fam­i­ly. It won’t hap­pen overnight, but it will be a very sat­is­fy­ing jour­ney.

What are you doing to improve your finan­cial edu­ca­tion? You can start by tak­ing our free 10-part email course & learn how to put your Elephant to work.