man touching money going up and not down

Education vs. Advice

How to be a truly successful investor

On January 10th, 2008, then Fed Chairman Ben Bernanke said, “The Federal Reserve is currently not forecasting a recession.” Only a few months later, the US entered into one of the worst recessions in our history.

During that recession, millions of “investors” who had dutifully moved their hard-earned money into a 401(k) were wiped out in the blink of an eye. Just a couple of years earlier, everyone was euphoric as the stock market soared. But when the recession hit, unexpectedly and quickly for the untrained investor, whole fortunes (and retirements) were lost.

Today, the stock market is again at a record high, and even current Fed Chair, Janet Yellen, is saying that it’s overvalued.

Does this mean there will be another market crash soon? Honestly, there’s no way to know. But one thing is certain, markets are cyclical. They go up and they go down. The key to success as an investor is knowing how to make money in both up and down markets.

How do you make money in any market?

The key to making money in any market is financial education. Unfortunately, most people simply have no idea how money works. Even worse, they have no idea what is in their 401(k). They simply have the money deducted and trust a manager to take care of it.

Occasionally, they might seek out a bit of advice from a financial advisor. But usually they don’t know what to do with that advice, or even if it’s good or bad advice.

And there is bad advice.

For instance, some common advice is “save money, and invest for the long term in a diversified portfolio of stocks, bonds, and mutual funds.” This advice is exactly why so many people lost their life savings in the last recession. They bet on market timing rather than investing wisely.

Money moves and so should yours

Last week, Robert and I had the chance to chat with our friends Matthew Kerkhoff and Andy Tanner on the Rich Dad Radio Show.

We discussed how to be prepared in any market. One truth that came from that discussion is that money always moves. In any market, whether up or down, there are those who money is flowing to and those who money is flowing from. Obviously you want to be on the flowing-to end!

This means that you can’t park your money in one investment and call it good. You have to understand what the markets are doing, how you can capitalize on them, and move your money accordingly. This means you have to move beyond advice to financial education.

As Andy Tanner said, “It needs to be less about, ‘What do I do?’ and more about, ‘What do I learn?’”

Get educated for success

It’s time for you to take ownership of your financial future. And that starts with education!

This is the reason that Robert and I started the Rich Dad Company. We don’t sell advice. We sell education. We believe you need to have the knowledge to think for yourself, and that the key to success is understanding how money works so that you can make it work for you in every circumstance.

By reading financial newsletters and blogs, like Matthew Kerkhoff’s Dow Theory Letters and Andy Tanner’s blog, along with the Rich Dad Blog, of course, you can gain the knowledge you need to make the right financial move in any market.

And when you’re ready to dig deeper, there’s always Rich Dad Coaching and Workshops to take you and your knowledge to the next level.

Today’s the day to move beyond advice and to education. Because, as Matthew Kerkhoff so wisely said, “An investment in yourself pays the greatest dividends.”

Original publish date: June 04, 2015

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