Why Learning to Invest Is Your Best Defense


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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

The article below explains clearly why we all need to have some personal finance skills.  Having an investment adviser is not enough.  It should be a partnership.  In order to build the right portfolio for your future, you need a basic understanding of investing.   To learn more about investing basics or investing strategies please review our Books of Wisdom Page.


Liu-Yue Lam

Why Learning to Invest Is Your Best Defense

GlobeInvestor.com reporter and columnist John Heinzl. If you aren’t paying attention to what’s in your portfolio, you may be playing with fire, says

If you’re a regular reader of Investor Clinic, this column isn’t meant for you. You obviously care enough about your finances to crack the investing pages of The Globe and Mail.

This column is for the person in your life—your child, mother, sister-in-law, barber, dental hygienist—who doesn’t know the first thing about investing, and would rather let someone else deal with it.

When I meet these people, the conversation usually goes like this.

“So who manages your investments?”

“Oh, I have a guy who does that.”

“What does this guy have you in exactly?”

“I don’t know. Some investments, I think.”

Let me be frank: If you aren’t paying attention to what’s in your portfolio, you are asking to be skinned alive and you need to give your head a shake. If you blindly trust someone else to manage your money, that person may not act in your best interest. That person may well pick your bones clean.

Before I continue, let me say that there are plenty of honest, hard-working investment advisers out there. They charge a reasonable fee for the services they provide. They behave ethically.

Unfortunately, there are also slimy, crooked, dishonest advisers. I read about them regularly in bulletins from the Investment Industry Regulatory Organization of Canada—advisers who forge documents, misappropriate client funds, lie to regulators, and inflict serious financial and emotional distress on the people who trusted them with their life savings.

Yes, the rotten apples are in the minority, but that’s of no comfort to the people whose lives they destroy. If you want to meet one of these sharks, a great way to start is to know absolutely nothing about investing and place all your trust in a perfect stranger to look after your money.

Most advisers don’t break the law, of course. But they have plenty of perfectly legal ways to transfer your wealth into their pockets. They can push you into mutual funds that charge annual fees of 2.5 per cent or more, churn your account with commission-generating stock trades, convince you to borrow large amounts of money to invest (thereby earning fees on the loan and the additional funds you buy), or steer you into principal-protected notes, labour-sponsored funds or countless other products of dubious financial value to you—and great benefit to them.

Think I am being too hard on the investment industry? Here’s what William Bernstein, widely respected author of The Investor’s Manifesto, says on the subject: “Who can you trust? Almost no one.… You are engaged in a life-and-death struggle with the financial services industry. Every dollar in fees, expenses, and spreads you pay them comes directly out of your pocket.”

The industry is so rife with conflicts of interest that, if you’re not paying attention, you stand a good chance of getting hosed. If you want to read some sad stories of Canadians being bled dry by the investment industry, pick up The Naked Investor, by John Reynolds.

So what is the solution? I believe that learning to invest on your own is the best method of self-defense. That means educating yourself to the point where you can confidently manage your own money, free of the conflicts that pollute many investment products and the “advice” that sells them.

As Tom Connolly, who writes the Connolly Report investing newsletter, says: “You can invest yourself. In fact, you must learn to invest yourself. … It’s your money. You alone are motivated to manage it best.”

With the proliferation of investing how-to books, Web sites and tools on the Internet, there really is no excuse to bury your head in the sand. Contrary to what some advisers will tell you, investing prudently does not require an advanced degree in mathematics or a special ability to forecast economic and market trends. All you need are some basic math skills, a desire to learn, and the proper emotional mindset. (In fact, learning to control your emotions may be the most important skill.)

Learning to invest does not happen overnight. But it will not happen at all if you don’t get moving now. Even if you ultimately decide to let someone else manage your money, learning as much as you can will help you to get the most out of your relationship and avoid becoming a victim. For example, I have a friend who used to do whatever his financial adviser recommended. He would buy mutual funds with outrageously high fees or buy and sell stocks when simply holding blue-chip shares would have been a far better choice.

Now, my friend uses five magic words whenever his broker makes a recommendation: “Let me think about it.” Then he does some research to determine whether the trade is in his interest, or the adviser’s. Often it’s the latter, so he politely declines.

Some people want an adviser to hold their hand. That’s okay. But don’t let your adviser grab your hand and lead you down a path that leads to his or her financial well-being at the expense of yours.

Don’t kid yourself. It happens all the time. The more you know about investing, and the more control you take over your own money and the crucial decisions that affect your future, the less likely it will happen to you.

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