Chapter 19: Further Research
Before diving into further research, let’s discuss two important concepts: conflicts of interest and the intended audience. Providing information about personal finance is a very popular pastime or job for many people. Their research, opinions and recommendations are readily available for your consideration. While many are well-intentioned, there are some who hope to personally benefit from the information they present. Watching for conflicts of interest will help you avoid acting on information that’s not in your best interest.
Detecting Conflicts of Interest
Conflicts of interest occur when the author or someone they know benefits if people follow the advice provided. For example, a forum member could recommend an investment they own, hoping you’ll invest and increase the price. Or, a blogger could recommend a product only because they get compensated if you sign up. To know if a conflict of interest is possible, it’s important to understand who the author is. Some individuals in the financial industry are obligated to disclose conflicts of interest, while others aren’t. If you can’t rule out the possibility, it’s best to err on the side of safety and look for multiple opinions.
The Intended Audience
The second point to be aware of when researching new ideas is the intended audience of the material. There are many differences between the financial situation of any two people. For instance, some people fear risk more than others. Resources, like articles and books, are created for an intended audience to whom the concepts apply. For example, in Chapter 6, we covered two possible ways to pay off debt. You can pay the smallest balance first, or you can pay the highest interest rate first.
An article titled “Pay Off Your Debt in Order of Smallest to Largest Balances” may not be the best approach for everyone. This is an approach for those who have trouble finding the desire to pay off debt. With this method, you can see real results by eliminating small debts and moving on to the next one. However, as we mentioned before, you could also pay down your debts based on the highest interest rate. Before applying the newest investment trend or budgeting approach, see if it’s intended for someone in your situation.
Resources Available
Now that you’re ready to critically learn from resources, let’s discuss the options. There’s a wide assortment of books, websites, blogs, forums and videos that cover personal finance topics. We’ve talked about several investments for your money that offer different returns. One of the best returns you’ll find is spending time and money learning more about financial products and ideas.
Books About Personal Finance
Books are a common source of additional learning because they’re convenient, structured and comprehensive. Working through books will provide new ways of thinking, alternate opinions and additional examples. You may come across a concept not seen before, which could better match your situation, or you may read new views on topics you’ve already seen, which help solidify your understanding. It’s often possible to present very convincing arguments for both sides of a decision. If you’re only seeing one side of the picture, you may be missing an important trade-off. You can find top-rated books online for topics, like paying off debt, earning more money, investing or preparing for retirement. It’s important to balance reading the classics that have stood the test of time while looking for new takes on each topic.
Digital Resources
With an ever-increasing number of online resources, given enough time and effort, you can learn just about anything. Personal finance websites grow in numbers by the day. The best part is that most of them have target audiences, allowing you to find a tailored site just for you. By searching descriptions of your current situation, you’ll come across multiple websites for consideration. Statements like “recent graduate with questions about debt payments” will provide articles that point you in the right direction. Personal finance blogs are common because it’s a topic that applies to nearly everyone. Finding a blogger with common goals will help you get great ideas that seem like they were written just for you. Visiting forums is helpful to receive summarized articles or discussions on a wide range of questions.
Another great way to learn is through video. The aid of visual cues and audio explanation can offer a more enjoyable way to learn. Topics range from the simplest of terminology all the way to complex financial situations. These videos can be used as a supplement to any existing plan of research and offer a unique experience.
Government Resources
Several of the accessories we covered throughout part II were sponsored by the Government of Canada. The TFSA, RRSP and RESP all provide incentives to save for various goals. Rules for these accounts are provided and enforced by the Canada Revenue Agency (CRA). Occasionally, these rules change, and when this happens, the Government of Canada updates its website. The CRA also provides details about your contribution room and tax records through its online system called My Account. For instance, you can find the amount of contribution room you have through this login under a section called “RRSP and TFSA”. To the best of my ability the examples in this blog illustrating government-sponsored programs used numbers that were current at the time of publishing. It’s important to check the Government of Canada’s website for the most up-to-date information.
The Ontario Securities Commission (OSC) is a regulatory body that protects investors in Canada. They also created a website called Get Smarter About Money that offers:
Articles on a wide range of personal finance topics
Calculators for mortgages, debt repayment, investing and more
Worksheets for budgeting
Tools, including quizzes and ideas for life events
These resources are excellent because they avoid much of the risk we noted earlier in this chapter. Topics are presented without a conflict of interest, since their mandate is to protect you, the reader. The information is also presented in an unbiased way, limiting the risk of acting on information not intended for you.
Final Thoughts
Continuing to improve your financial literacy will allow you to take advantage of opportunities today and in the future. You can combine the resources we’ve discussed in many ways. You may read about a new idea in a book or article. If there are unfamiliar terms, you can watch a video to learn more. And if you have remaining questions, you can visit a blog or forum to get answers. Along the way, remember to explore both sides of the trade-off decision and look for multiple opinions before moving ahead.
Key Takeaways
Understand potential conflicts of interest and the intended audience before acting on information.
Earn the highest returns available by investing in your financial knowledge.
Explore multiple opinions and take advantage of different modes of learning to retain new information.
This blog is a duplicate of the recently self-published book The Snowman’s Guide to Personal Finance available for purchase here.