This post is a part of Women’s Money Week 2012. For even more posts about savings and investing, visit womensmoneyweek.com.
It’s been a long time since I’ve made a confession. I feel that you’re due. So here goes: I don’t know anything about investing.
For a personal finance blogger, that’s a pretty sad fact. But in my case, it’s true. There’s no good reason for it, either, except for the fact that it bores me to tears. I don’t care about the stock market. I don’t care about figuring out returns. I don’t care to know about bulls and bears unless it’s knowing how to avoid contact with them. And the tickers that run at the bottom of some news networks? Are more confusing than trying to figure out where the
Believe me, I know how awful that sounds. I know how important it is to understand all of that information. It affects my retirement fund, my interest rates (does it?), and so many other aspects of my finances that it actually does me a disservice not to understand it. But I just can’t bring myself to understand it. It’s a problem I’ve had since high school when my economics teacher attempted to teach us about stocks. It was so complicated and so boring to me, I tuned it out. It’s a pattern that’s just stuck.
That doesn’t mean I don’t invest. I do have a retirement account (or two) that are dependent on investing and stocks and all of that. Sadly, I have no clue which companies I’m invested in. I tried to care when I was picking the companies. My husband encouraged me to read portfolios and about long term rates of return and all of that. And I tried. I really did. But after 5 minutes, I stopped, picked the ones that had the most interesting names and went with that. And I haven’t made a single change since I first picked the stocks.
I want to understand investing. I try to read blogs and posts about investing. I follow news stories. I ask questions of people who know what they’re talking about. I’ve been making a concerted effort to learn but unfortunately, the harder I try, the worse it gets. For some reason, my brain will not allow me to absorb the information that’s available, no matter how well written or simplified (it is at the point I feel obligated to say that I believe if I knew less song lyrics and movie lines, there would be more room in my brain for this information). It’s as if I’ve been sprayed with investing repellant.
Sadly, I’m not alone. While I may be an anomaly in the personal finance world, I’m a statistic in the real world. In my real life, I don’t know a single woman who actually understands investing (or admits to understanding investing). Most of these women say that they leave it to their husbands to understand and take care of it; it’s just not something that they care to be bothered with or even care to comprehend. I think that’s where we differ. While they don’t care to learn or are more than happy to sit back and let their husbands take care of it, I genuinely want to learn. I just struggle more than I’d like.
I believe it’s extremely important for women to understand and learn about investing. It’s part of taking an active role in our finances. Relying on someone else to do it for us is no longer acceptable. And, if you’re willing to teach me about investing, and have an extreme amount of patience, please let me know. I really want to understand my retirement account.
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[…] the soon-to-be-esteemed Blog Post of the Week! comes from Jana at Daily Money Shot, and is called Confession: I Don’t Understand Investing. As a recovering financial advisor,I was attracted to the fact that she admits to being the […]
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[…] Money Shot confessed that she doesn’t know much about investing – so I’m glad I’m not the only one! There’s a lot of great support in the […]
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[…] fact that after perusing it, I realized that it was heavily focused on investing (we all know how I feel about investing). I figured there was no way this book could capture my interest or attention but you know what? It […]
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[…] our day to day expenses and he was responsible for more long-term stuff like investing (since I don’t understand it at all). Neither one would make unilateral decisions but the bulk of the heavy lifting in each area was […]
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[…] the meantime, I wanted to share that, although I still sit firmly on the “I don’t understand investing” side of things, I have picked up a few tips since I made that confession. Before you investing […]
I know the topic of investing can get really confusing. But instead of reading blogs, I suggest reading a book on Investing from start to finish. Feel free to email me if you need book recommendations.
Tushar@StartInvestingMoney recently posted…Investing Basics: Set Realistic Timely Goals
I will take you up on that. But for me, I’d probably need a picture book. Shameful, I know.
I don’t think I understand investing myself. I tried to about a decade ago by investing in individual stocks, but I got burned.
Most retirement and investment planning is a simple calculation of your risk tolerance. Many financial planners use a Q&A document that “grades” your risk tolerance then can guide you to the investment options that best fit your risk tolerance.
The best thing to do is speak to a financial advisor…take the Q&A document…then put your money into mutual funds or ETFs that match your risk. Don’t do individual stocks or bother reading reports…no one outside of wall street has time for that. Hope this helps a little.
I Am 1 Percent recently posted…Why I Started Blogging about Personal Finance
I am very risk averse. VERY. I probably need to get over that a bit. My husband is the one who talks to the financial advisor because he understands what she’s (yes, I get the irony in that) saying.
I know a bit about investing – I’ve bought and sold options, I’ve shorted stocks, I’ve bought single stocks, I’ve speculated, I’ve day traded. And I’m pretty “into” the stock market. After all of that, I now invest almost exclusively in index funds and ETFs – I don’t care about one or two companies. I have no interest in the iPad3 launch. And I do just fine. I’m a firm believer that unless investing is your full time job it’s better to just buy index funds and worry about making more, spending less, giving to causes you believe in and spending time with your family.
Nick recently posted…For those about to blog, I salute you!
Nick, those first few sentences had me more confused than I was before 🙂
But your advise about making it as simple as possible is good.
Nick, what is an index fund?!
“It’s as if I’ve been sprayed with investing repellant”. LOL…. I can totally relate! I too have tried to understand the ins and outs of investing, but my brain refuses to comprehend any of it. It starts going off in tangents: Stock Market. Stocket Market and Wall Street. Oh Wall Street was such a good movie. Wasn’t Darryl Hannah in Wall Street? Whatever happened to her? Oh, she was good in Splash… You see where I’m going? This is what happens in my head 🙂
Mackenzie recently posted…Decluttering: Project Simplify
That’s exactly what happens in my head!! I am so glad I’m not the only one who digresses that easily when it comes to this stuff.
Okay, seriously get out of my head. I think some just have a knack for it. I wish I understood it better. Our 529’s and IRA’s have made some great returns in just the six months since I’ve opened them. I know what they are invested in but I couldn’t tell you why one fund is better than another. I really wish I knew.
Niki recently posted…Not Buying It: Chocolate Syrup
But you know what they’re invested in! That’s a great start. I couldn’t begin to tell you which stocks or whatever or 529 and IRAs and my other retirement fund are invested in. I know if I’m making money or not…maybe that needs to be enough?
I am so with you girl! I don’t know the first thing about investing. I don’t even know where to start. If I ever get to the point where I can do something like this, I’m going to be needing all the help I can get. For now, I am just trying to fund and emergency fund and keep it funded.
Jessica, The Debt Princess recently posted…Women’s Money Week: My Story about Saving Money
Emergency fund! Now you’re talking in my language! That I can understand. The rest? Not so much.
Sadly, you can add me to the list of woman who don’t understand investments. I feel like I need a remedial course or a talk to me like I am three year old kind of class and not because of my intelligence. It’s like a trying to learn a different language and let’s face it I struggle with English (the only language I know). I know I need to get a grasp on investments soon. I just keep saying after our debt is paid, after we have am EF but in reality I know it needs to be made a priority like yesterday!
Sounds like you hit on a great on going topic as you learn the ins and outs!
Jenniemarie @ anotherhousewife recently posted…Stepping Out of My Comfort Zone
That’s actually not a bad idea for a series.
I’ve done the same as you. I keep saying I’ll learn it later, after the debt is gone and the EF is fully funded and we’ve moved…there’s always an excuse to not do it. But I need to understand where my money is going.
When I finally decided that I had to learn about investing, I was working in finance and felt so (for lack of better word) stupid because I didn’t know anything about even what a 401(k) was. But I’m not stupid. I’m actually pretty darn smart (if I may say so myself!). It was just so much info to take in at once that I would shut down after a short period of time trying to learn. And I think a lot of women are in the same boat. Honestly, investing info IS quite boring.
But, that being said, I think it’s very important to know the basics, so I taught myself (with a lot of help from understanding finance friends). I started by learning what a 401(k) was. Then I learned how to read my investment report. From there, I picked up the book “Understanding Stocks” by Michael Sincere. It’s a decent read, very well-written. Even so, I had to force myself to finish it. Once I did finish it, I had a good basic understanding of stocks and the stock market. From there, I built on my knowledge little by little, educating myself through my first non-retirement account stock purchase.
I’m certainly no expert in the stock market — I’ve never taken part in day trading or anything like that — but I now understand the basics and can make informed decisions. Learning about investing will always be a life-long goal for me, but I’ve made headway.
So, my point? I think that starting small and finding a book that is interesting enough to hold your attention for short spats makes learning about investments do-able. It’s definitely worth the effort in the end!
Christa recently posted…Common Financial Mistakes: Foregoing the Home Inspection
Christa, I really enjoy your posts on investing. They’re extremely simplified and basic…perfect for someone like me. I read them and think “hey, this isn’t too hard!” Then, sadly, I forget what I read. Because the information just doesn’t stick.
I’m going to check out that book. Thanks for the recommendation!
I don ‘t understand it either!! if you learn anything, please impart your wisdom on me. i just don’t get what it all means!!
Newlyweds on a Budget recently posted…His debt, Her debt, Our debt
What I learn, I will share! I promise!
To me 401k is a no brainer. I have always put away the max for my company match.
I have also used any extra cash I have to build a small cabin over the past twenty years. Now it is a place i dream to live…debt free:-) Building the cabin has been the funnest part. If i could say one thing about financial planning and investing, it would be…build a cabin;-)
Chuck recently posted…Do it Yourself Credit Repair -vs- Paying a Professional
That’s definitely an interesting plan!
If it’s possible to know a negative amount about investing, that would be me. There’s just so much information on it; I know that I should start investing, I just don’t know where to start!
Daisy recently posted…Financial Protection: Pretending You’re Broke
I hear you on that one. I do invest and I know that it’s important but there’s just so much to understand and learn as to why and what I’m doing that not learning is easier than starting to learn. As I write that, I realize how backwards it is.
I’m with you, I’ve tried SO HARD to understand investing but it’s all miles and miles over my head. Any time I try to actually learn about it I end up more confused than I was when I started my research, so I give up. At some point I’m going to sit down and really put my mind to at least getting a basic grasp on investing concepts.
Addie recently posted…Depressed
I’m with you on that. The same things happen to me. It’s so frustrating!
Wow! I’ve been planning a post pretty well exactly like this! We have been trying so hard to learn but it is very confusing! We have a financial planner now who I’m hoping will help us to learn but so far we haven’t gained much knowledge… I try to read ‘investing 101’ type articles and stuff but even the basics use so many terms that I just don’t understand! sigh. It is certainly frustrating.
Marianne recently posted…Frugal Food Tip: Freezing Bacon
I’m completely with you – I don’t understand investing at all! It’s sad but…I’m trying to learn. It just seems so hard. 🙁
Young Professional Finances recently posted…Calculating Net Worth For The First Time
This is very brave of you to confess. But you want to know the ironic thing? You probably wouldn’t be any better of an investor even if you DID understand investing! There are a lot of people who pretend to know what they’re doing, but they don’t. Just when I think I know what I’m doing, I find out that I really had no idea! It’s all part of learning. But I think you have the right approach. Being honest with yourself is the best defense you can have when it comes to investing or many other facets of life.
MyMoneyDesign recently posted…Adventures in Refinancing, Chapter 5
Don’t feel bad! I actually took several finance and investing classes doing my MBA… and I still invest in low fee index funds. I understand it, but I don’t find it interesting – so I don’t stress about it. As long as I’m putting money away, I’m happy.
Kris @ BalancingMoneyandLife recently posted…March Grocery Challenge – Week 1 Update
Thank god someone said this before i did Jana! haha. Seems like you have uncovered a lot of those who are not totally clear on the subject, myself included!
Just be sure to let us know if something clicks for you!
Michael
I read this post in my rss reader, then had to click through to see the comments! I thought for sure you would have been flooded with advice from other PF bloggers. To my surprise, it’s mostly other women with the same “problem.”
I now feel a sense off duty to write something on this topic. Will be linking to this post when I do.
Matt @ RamblingFever Money recently posted…The Cost of Gas: Who to Blame and What To Do About It
True story: I worked at an investment bank during my summer internship and took finance and accounting classes in college, but I had to call up my middle school teacher and have him explain to me, step by step, how and where to open up a Roth IRA. There’s a lot of jargon when it comes to investing, but the principles are actually very understandable, especially if you are not into exotic types of investments. I like Jack Bogle’s books (he’s the founder of Vanguard), I’m sure you can check them out at the library.
Well Heeled Blog recently posted…Fess Up Friday: All The Things I Want To Buy Edition
Kudos for recognizing and facing your problem head on. Not too many people would be brave like you. I enjoyed How to Make Money in Stocks by William J. O’Neil. Good luck to you!
Buck Inspire recently posted…BI 015: Blogcast FM with Srinivas Rao
It’s hard to learn about a topic if there isn’t at least a bit of interest. I have the same issues with options trading. I understand the basic concept, but I haven’t quite taken the plunge.
101 Centavos recently posted…A Fistful of Links … Or, I Get By With a Little Help From My Friends
Hi Jana….
My daughter feels much the same way. I view this as a great failure on my part. I wrote this for her:
http://jlcollinsnh.wordpress.com/2011/06/08/how-i-failed-my-daughter-and-a-simple-path-to-wealth/
it remains the most popular post on my blog. good luck in your journey.
Jana,
Thank you for being so honest; I happen to love investment analysis, and have been involved in some way for over 30 years. This is why I founded http://www.financialwoman.com several years ago.I share information about money and investing specifically for women in every day language; I often use clothes as metaphors, because I love clothes! Come see me!
Index investing is simple, as another reader wrote.
There are many things that we have to take care of that are boring:dishwashers, and cars come to mind. Love your money and give growing it some attention. I can tell you are a savvy woman. Best, Camille Gaines
Camille Gaines recently posted…Friday Financial Woman Money Solution
Successful investing is similar to shopping to find and purchase items at a discount. Thus, you need the expertise to put an approximate value on the company, like you need the expertise to put a value on what you are buying, then you need to wait to buy something when it is selling at a substantial discount, I like 50% off, to the value you put on it. Part of the problem is almost all the information about investing that you probably hear has as much validity as the witch doctor’s approach to medicine. To pick individual companies is a daily job. If you are going to work at it daily, then passive investing in an index, or a company like Berkshire Hathaway at its current price, is a better option, particularly investing the excess money you make gradually over time.
Jana, I recommend that you read three books starting with The Automatic Millionaire by David Bach, Common Sense on Mutual Funds by John Bogle, and Yes, you can get a Financial Life by Ben Stein (yes, THAT Ben Stein).
I have a list of books and resources on my blog: http://www.accessnotdenied.com/p/resources-and-websites.html
Good Luck,
Joe
J. A. Saglimbeni recently posted…How I Evaluate Stocks: Brands and Moats
Hi Jana,
I stumbled upon your blog from Twitter. I DO understand investing either via mutual funds, 401ks, or directly into stocks. I am working on getting my blog to a more professional level (I have even more blog envy now that I see yours). I would LOVE to help you understand investing if someone hasn’t already stepped up to the plate.