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The Real Reason Why You Aren’t Able To Find A Straight Answer From Anybody, Particularly The “Professionals”.

Let’s Imagine that you’re a business person with an project which needs financing. You know it will be worth billions of dollars and could change a whole industry if you could only obtain the starting funds required to get it started. Then One Day, you’re reading your mail, and Pow! it’s there! An invitation to an important dinner with numerous potential millionaires, and each one is waiting for the next big startup. You clean your suit, shine your shoes, and get ready to go.

You go to the meeting, having yourself a wonderful time. However when you get back home, you realize that from several hundred possible capitalists at the meetup, you only conversed with around 5 prospective investors, even though you had the time and opportunity to get to know many more. So what happened? Well, you realize, you must have become at ease with those five, and the mixture of these people being a possible method to satisfy your dream in addition to the uncomfortable work needed to get to know dozens more made you stay with them. In other words, you abruptly became psychologically “ignorant” towards meeting new prospects.

At this point let’s back up to before you went to the party and say you suddenly found out that the keynote speaker was somebody that you shared a common argument with, and who would be personally visiting each and every table in the dinner part of the meeting. Knowing that it will be a very uncomfortable situation, you alternatively send your best buddy to take care of the hopes and desires for financing to the conference. However, will he have your own interests in mind, or is he merely likely to eat Kobe steak and sip expensive wine while trading dirty humor with multi-millionaires?

Both of these scenarios are good examples of what economists call “Strategic Ignorance”, which is a circumstance or choice in which a person, corporation, or even an entire country intentionally disregards an ugly reality, abandons further information collecting due to overload, or avoids the need to make a decision that has a substantial probability of a negative final result.

Everybody does this to some extent, you, me, your stockbroker, the news, the government, and also that little old lady growing rice way over in China. It’s an integral part of human nature, but it’s a really dangerous activity.

Let’s say that you are working for a corporation, and that you budget a little cash monthly towards your retirement. You begin by using your company’s 401K retirement selections, which match contributions if you hold them there for a certain amount of time. However, after a specified time frame you have a portion of that 401K which is fully vested. So what now? Do you move that part to an IRA account that you can manage, and chance being forced to inform your loved ones that you lost eveything if events turn bad, or do you blindly trust what the manageer of the 401k does with it, knowing that you’ll be able to point out that “it wasn’t my mistake!” in case things go sour? Millions, needless to say, opt for the 401k. Some others select financial experts who basically do the same thing the 401k administrators do, choose a fund, then set it and forget it.

But isn’t learning to invest something best left for the professionals who have time to learn? You’ve got children, school, your job, pets, your favorite Tv show, and your neighbor’s pool party to attend and look after, only in the next three days! So isn’t there someone with the time that you can trust to deal with it?

The issue there is that the entire financial industry likewise practices strategic ignorance on a grand scale. Furthermore, much like your friend at the get together, they often have got motives different from your’s. Look at the commercials before, during, and after your favorite money show. Are they advertising stock brokers which make money whenever you “BUY, BUY, BUY!” or “SELL, SELL, SELL!”? Does the nighttime financial news have a bevy of advertisers that could get upset if they reported on a major industry crash in advance? And does the government possess a vested interest in not concerning individuals with reports of an upcoming real estate bubble, like they didn’t want to mention in ’07, even as many of the alternative bloggers and information sources on the net were pointing out the obvious?

And how about your financial adviser? Is he or she personally more well off learning the markets so he is able to make knowledgeable suggestions to you, or is he much better off repeating the “Buy a balanced bundle of stocks and hold for the long run.”, mantra, even if that strategy has proven unfortunate for most of the people saving for retirement, and just doesn’t work in today’s marketplace? Exactly why might he do this anyhow? Easy. Nearly all financial planners actually only know a few things well; how to promote their products and services, the laws regarding a Series 7 license, and the basic rule that potential predators will always attack the animal that strays away from the herd, so don’t stray from the “buy and hold” herd, and you won’t get sued. All other knowledge is usually dangerous to their careers, and to be ignored.

Now, before anyone gets angry at me for saying what i just said, I really want you to pay a visit to your financial advisor and ask them how many clients he’s taken from middle-class to having enough within their accounts to make SEC Accredited status. Most won’t know what you’re referring to. I’ve actually had an investment adviser that i had been talking to let me know that return on her clients investment isn’t significant, it’s the risk level that the client feels safe with that’s important. In other words, it’s whatever they can sell, instead of whether or not you really make money that’s important. I don’t know about you, but I personally wouldn’t give a nickel to that individual.

Learning to discover and get rid of strategic ignorance in your fiscal life is usually vital to your future economic health, but most men and women continue to chuck their cash to the “experts”, in lieu of learning enough to even know a good financial planner from a poor one. (Yes, there are good ones out there.) Instead, they are putting their trust in the hands of someone who’s most probably driven by the best commission payment on product sales they can get.

So get out there, find some good books (Robert Kiyosaki’s books are a great starting point), and learn how to dig deeper in the fiscal news. Also, think about picking up a copy of The $300 Trillion Dollar Crisis in order to be ready when the next great financial bubble pops. The retirement account you save just might be your own.

Our banks, personal finances, and general economy are in a constant state of change right now. In addition, we are currently facing some of the most challenging and dangerous financial crises that the world has ever see. I personally invite you to come over to my blog, The Rogue Economist, or check out my online E-Book, The $300 Trillion Dollar Crisis.