Financial literacy refers to the ability to comprehend and deploy multiple financial skills, including financial management, investing, and budgeting. It dictates the foundation of your personal relationship with money and makes you a life-long learner when it comes to making intelligent investments. Financial advisors recommend you start early to build wealth with smart investments.
Kavan Choksi and the need for financial education
Kavan Choksi is a reputable business and finance expert that emphasizes the importance of financial education to make intelligent investments. There are several skills that fall under financial literacy, and some of these examples include debt management, evaluating tradeoffs between investment and credit products, household budgeting, and others. Besides the above, these skills also need a working knowledge of primary financial concepts like money’s time value and compound interest.
There again are other financial products like student loans, health insurance, mortgages, and investment accounts that are self-directed in nature that has gathered a lot of importance. Financial education and literacy have now become the need of the hour to make intelligent investments in the market.
Short-term and long-term financial strategy for wealth building
With the help of education, you can also cover several short-term and long-term strategy as well for investments. If you are aware of your assets today, you will know how they will impact your taxation tomorrow. This means can make the proper choices when it comes to choosing your best investment vehicles.
Education stops you from making financial mistakes
Financial literacy can stop you from making grave mistakes when it comes to taking loans. Note that loans with a floating rate will have interest rates that vary each month. Again, IRA contributions can only be withdrawn once you retire. In short, even small innocent financial choices might have long-term results that can cost you dearly or even impact your life plans. When you are financially educated and literate, you tend to make lesser mistakes.
Prepares you for emergencies
Financial literacy also prepares you for emergencies as it helps you to save every month. For instance, losing a job or having an expense that is major in nature will affect your finances drastically. When you have an emergency fund stacked away, you are always prepared for the future.
According to business expert Kavan Choksi, it is essential for new investors to consult an experienced and skilled financial advisor to understand the asset class and how it works. For instance, new traders in the stock market must keep track of the latest news and market trends to know how the asset class responds to changes in the market. Beginners must ensure they only enter into stock market trading with understanding the basics well. It is straightforward for one to lose money if they do not have accurate information and knowledge.
Last but not least, financial literacy not only helps you make wise investment choices, but also gives you the economic confidence you need for a secure life. With the help of this education, you can build wealth and attain your financial goals effectively.