Tuesday, 2 June 2020

What Is the Best Form of Investing Education?

What Is the Best Form of Investing Education?

In this article, we’re going to take the time to compare some popular forms of investing education. The internet and other developments in learning have created a microcosm of different ways to access content about investing and money in the modern days. 

Let’s look at how these learning opportunities compare against one another, and decide whether one appears to be substantially better at educating than the rest. 

Of course, we’ll need to generalise in this article to allow us to come to any form of opinion. We’ll categorise the various types of education below, but there may be other forms and some may sit somewhere between these categories in reality. You’ll need to forgive any generalisations you feel are unfair, but of course please leave a comment below and start a conversation with us if you have a different opinion. This is an opinion piece after all, and I invite you to share yours with us so that we can continue this discussion. 

The different types of investing education

I see three main categories of education providers today:

  1. Traditional education providers, such as colleges, universities and professional qualification private education providers (such as BBP, Kaplan in the UK for example).

  1. Friends and family and others in your personal network of contacts

  1. Investing book authors, online course curators and YouTubers

Are you surprised at this list? Do you find it strange that I’ve listed ‘friends’ next to ‘universities’? Of course, I recognise that there is a huge gulf between the reputation (and expense) of these two options, but I’m trying to be practical. There are many ways in which we can learn how to invest, and simply being taught by someone you already know is a very, very common way to learn, so it’s worth recognising this here. 

What does financial education comprise of?

Also, while a friend is unlikely to be able to offer 25 hours of solid lectures on financial matters, it’s probably true that you don’t need 25 hours of content to get a firm grasp on the basics of investing. You don’t need to be an Oxford Professor of Finance to be able to buy shares, after all. 

What you need is a good understanding of the basic principles that govern the pricing of financial markets, you need to understand how different investments actually ‘work’, and their risks and rewards. Finally, you need to be taught how to create a portfolio of investments that will weather any financial storm and produce long term returns which compensate you generously for the risks you have taken.

Which investing education format is the best?

The simple answer is that there isn’t a single best source of investing education, but you knew that I was going to tell you that. 

Much like investing advice in general - you should always think about your own circumstances rather than take instruction from generalised ideas and principles. The same applies to education. What are your learning needs? Do you need practical knowledge on how to place a trade? A friend might be perfect for that.

Do you want to understand the advanced theories behind portfolio construction? It sounds like you may need formal training to explore that topic.

Or do you want to understand the ‘common sense’ actions that most investors take, and get some simple portfolio ideas? If so, then a free investing course or investing book might be enough to get you to a place of confidence. 

It all starts with you, your needs and how knowledgeable and confident you currently feel. Education is a tool you can use to move you from where you currently are, to where you need to be. Only you understand your current location and how far you need to travel!

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