Thinking back over my days in high school, I remember the presence of some character in every class who was constantly asking the teacher, “How will this be useful for me in my life out of school?”. No matter the class, no matter the situation, the question would arise, to the disbelief and annoyance of the teacher, who never really gave an answer.
I would really like to go back, and review the subjects I learned back then just to see how insightful those kids were. To see how much of what I learned back then has helped me get to where I am today. I won’t though, rather I want to look into a slightly different topic. I believe that there is one subject that everyone should be taught at school as it would be invaluable in helping you make your way through life, no matter what background you come from, or where you are going. This subject is never on the curriculum though. I don’t know why. It is Financial Literacy.
Financial Literacy class would prepare students with the basics, giving students the opportunity to examine their possibilities and have some basis for making decisions regarding their finances. You want to give students a chance, as many make the most foolish mistakes and finished up mired in debt they are unable to service. Financial Literacy would try to counteract that; here is the way the class would progress.
Week 1. Avoiding scams. The teacher would deliver a tutorial on avoiding scams that prey on the young and naive.
Week 2. Will you be able to pay back the money you borrow? The second part of the class would help students figure out if borrowing money for business or personal use is a smart thought. Credit card debt, mortgages, and other loans would be discussed. The thought would be to give students a concept of cash flow and how to service a debt, while exploring tax benefits of debt.
Week 3. Asset evaluation. Students will have a chance to evaluate assets. What is an appreciating asset? How is that different from a depreciating one? Earning assets will be covered along with consumables. Defining one’s net worth is a series of decisions and students will see which choices will give them hope for the future.
Week 4. Investment strategies. Any investment you take has a number of consequences and risk potential. Students will be given the tools necessary to tell what a risky investment look like. Also, when the signs point to a winning gamble, they should be ready to pull the trigger. Although it takes a excellent amount of courage and a small recklessness, fantastic investments can turn a life around.
Week 5. How should you leverage investments? Working with investment portfolios, students would be instructed on the process of leveraging. Tax concerns would be part of the lesson, as there are significant tax breaks available when taking out a loan for an investment.
Final lesson. The final lesson of this course would be place it all together. The steps you should take to avoid the financial problems so many people face. How to structure yourself to maximize your legal protection and your tax position. And of course, how to use the money you have to most effectively make wealth and income, given your personal tolerance to risk.
Damian Papworth understands that you do not require mutual fund investments. Having learned some simple strategies, you can be your own investment manager. Click here to get your own unique version of this article with free reprint rights.