The Key To Success – Increase Your Financial Knowledge

If you don’t already know what you are doing, you need to learn before managing your own investments. Take courses on invest- ing and read several books on the subject first. This isn’t an activity to be learned as you go along. The potential damage you can do to yourself is catastrophic.

Financial planning and investment planning aren’t rocket science, but they aren’t basket-weaving either. Don’t underestimate what’s involved. As with a lot of things, financial planning looks easier than it really is.

I have a client – Brian is his name – who was the owner of a medium-sized drilling company. Brian is an educated guy and could have built an excellent retirement plan himself – if he had known what he was doing.

When he first called me, he had just been audited by Canada Revenue Agency. He didn’t understand how CRA’s attribution rules worked. For years, Brian had been reporting investment income on his wife Deb’s tax return – after all, the investments were in her name. Brian thought Deb could report and pay the tax on the investment income at her tax bracket. Brian was wrong. Canada Revenue assessed him more than $18,000 in tax, interest, and penalties. Even small mistakes can be very costly.

Brian is like a lot of people. They over-estimate what they know and underestimate the task. If you plan to look after and manage your own wealth, assume you know nothing. Take enough time to learn the strategies, opportunities, and potential problems inside and out. Excellent books are available on every financial topic. Most universities and colleges offer adult education classes in financial planning. If you really want to learn your stuff, take the Certified Financial Planner (CFP) program. Just don’t plan to learn by your mistakes.