There's no such thing as a stupid question especially when it comes to personal finance
DID YOU know that in the USA, the 28th of September, is known as ‘Ask a Stupid Question Day’?
Its origin came from teachers who tried to encourage students to ask any type of question, because many were afraid to, for fear of being laughed at by other students, but not on this day because any question, stupid or not was okay.
I’m sure we’ve all at some stage, whatever the setting, especially a public one, would have loved to asked a question but we backed off for fear it would have come across as stupid and by de facto that would make us stupid, and nobody wants to feel that way.
Anyway, when it comes to people’s finances, a day probably doesn’t go by when people ask me a question which starts with, this might sound like a stupid question or I’m embarrassed to ask you this because I should know the answer.
And my response is always either, it wasn’t a stupid question or why do you think you should know the answer?
People typically ask questions because a trigger event will make them think about one. For example, with the cost-of-living increases, people want to see if they are managing their finances okay or is there something better they could be doing?
Or a friend or relative of theirs is retiring and they want to know if they are on track to have a comfortable retirement or when can they retire?
There could be any number of reasons people might want to ask a question, and I’ll give you a small example of what people think are stupid questions, and I could literally give you hundreds:
If I died will my spouse get my pension fund, am I saving enough, how much should I hold in any one stock, how much will my kids cost me if they go to college, am I paying the correct amount of tax, is my mortgage rate too high, if I died would my family be financially okay, how long should I invest for, should I rent or buy, how much can I borrow, what’s a mutual fund, how much should I hold for emergencies.
I could go on and on. And I think you’ll agree, not a stupid question in sight, but in someone’s head when they asked it, they thought it was for whatever reason.
I’d day, it’s better to admit that you don’t know something than let the fear or embarrassment lead you to making decisions that you’ll later regret, because if we don’t ask questions, we’re not getting any information that will allow us to make good decisions.
Take putting money into a particular investment account.
If someone is trying to sell you one and you don’t understand it, or why it suits you, you must ask them questions, otherwise you could end up investing in a product that isn’t appropriate for you.
Don’t worry if you think you’re asking the most basic of questions like, what exactly am I investing in, what are the charges, what will I get in the end, is there a plan b, can I lose all my money, is my money protected, how do you make money, are there entry or exit penalties etc.
What am I investing in, might seem like a simple question and a very obvious one, but you’d be amazed by the number of people I encounter who ask me to review an account they set up recently or years ago, because they haven’t a clue.
Not wanting to sound stupid or trusting the adviser too much, which are a lethal cocktail when combined by the way, are largely the reasons behind their not knowing.
So, you should never invest in something you don’t understand, and if someone can’t explain any type of financial product to you, then they probably don’t understand it themselves.
Look there are no stupid questions when it comes to your finances, and it’s much better to ask one now, than having done something without asking, that you regret at a later date, that’s stupid.
And it can be daunting sitting at a presentation that’s maybe arranged by your employer and the talk could be on pensions, debt, investing, mortgages, how to manage your monthly cash flow etc.
I do these all the time and they can be in front of 10 or 1,000 and invariably at the end, I ask if anyone has any questions or if anyone was unsure about anything I said, and you do get questions but not as much as you’d think, but when I stay back afterwards, there’s always a queue of people waiting to ask a question.
And it’s not easy to ask a question in front of a small or large group of people, just for fear some people will think the question stupid, or you don’t want to expose yourself as being the least knowledgeable person in the room, I get that, which is why I get a lot more questions if I’m doing an on-line presentation where people are much more willing to post their question because it's asked silently where you can’t hear or really see the reaction of others to it.
It's great though when someone does ask a question out loud that might initially get a few laughs but once it is answered respectively, it can be very empowering not just to the person who asked it but to others as well because I’m pretty sure the person who asked, what they thought was a stupid question, was exactly the same question others wanted to ask but were afraid to.
So many people are willing to sit through a presentation and let the content go over their heads, and they leave no smarter about the topic in question than they did when they entered the room. They might take some notes and then try figure it out themselves afterwards rather than learning in real time which apparently is when all the best learning occurs.
Anyway, next time there is a presentation that you attend, if you’re unsure about anything, ask a question and don’t start with, this might sound like a stupid question, be courageous and start with, my question is and I’m confident the presenter won’t laugh and no one else will either, in fact they’ll be happy you asked it and so will you.
As the saying goes, there are never stupid questions just stupid answers. And if you feel you should know more about money, I’d say join the club because you’re more usual than unusual.
But please, never think a question you want answering is stupid, so much so that you end up not asking it. If you want to make progress with your finances you’ve got to ask questions, and don’t ask them for the sake of asking them either, ask them because you don’t know the answer or because you’re still not sure you understand fully.
It’s often said that stupid questions are the best questions. And they say this because if the answers are explained in a way that is simple and not condescending, that’s the basis for total understanding.
So, I’ll repeat myself - never be afraid to ask what you think might be a stupid question. It’s the only way to learn, it’s the only way to make progress and it’s the only way you make sure you don’t make a mistake you’ll later regret.
Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at firstname.lastname@example.org or www.harmonics.ie
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