Wealth creation is more than just getting a job and working for 45 years and hoping that in that time you manage to save some money, build a little equity in your home or develop growth in your superannuation.

These can supply you with some long term income but there are risks with them as much as any financial activity. Consider the losses that have been experienced by workers in the last year in the super funds. Some funds have seen losses of up to 50% or more and those retirees relying on their Super for income are feeling the squeeze. Property is not so bad since there is reasonably clear cycle. You can usually get out when the cycle favours you but if you need cash in a hurry then sometimes you have to sell on the back of a downturn.

As for cash in the bank, great when interest rates were 15% (remember the 1980's?) but a disaster if they are 3%!

This is why many Australians have turned to the share market as a means to take control of their financial future.
 
But don't the super funds trade in the share market?

Well yes, but they clearly are not the experts that we have been led to believe!

Most of what they are doing you could learn to do yourself and get involved in the management of your money more actively.

To do this though requires education!

Education

Now when I say education I am not referring to the picture you may have in your mind of a school teacher standing in front of 32 pupils and telling you what to do!(Not many modern classrooms run like that these days anyway!)
What I am talking about here is self-improvement, skill development, understanding, knowing where to go and what to do if....

You would not go out and jump in a 20 tonne truck and expect to drive around town without an incident, now would you?
You would find a reputable driving school with properly equiped vehicles and well trained, licenced instructors.

The same goes for investing. You need to learn the language, terminology and the techniques that lead to successful trading.

“Where do you get that?” I hear you ask.

Well first off here! I will share with you some basic information and strategies to raise your share trading knowledge. I make no claim to be an expert, but I will share with you what I have picked up over the last few years and also point you in the right direction when more in depth knowledge is required.

Homework

Now, before I finish for today let me leave you with a few tasks to take on board.

First thing get yourself a workbook – this can be a simple exercise book or loose leaf file to keep notes in and record questions you may have from time to time. You could of course use a word document to do the same thing but you won't always have access to computer.


Writing something down involves more of your senses and improves learning. Buy some coloured pens and highlighters too – use colour to outline important ideas and points of interest. I often set up a colour key – yellow highlighter is for one topic (eg options)and green for another (puts), green pen for new terms and definitions, red pen for actions that need to be taken!


Next I would encourage you to go to the ASX website and join their site. This is free and will give  you access to charts and data that is freely available about different companies. It will also start exposing you to some of the terminology  that is common in this wealth creation strategy.


Once you are logged in I would ask you to find out all you can about BHP.
Do a search on the site and find out what the companies full name is and what sort of business it is in. This may seem like a simple thing but it is the first step in understanding the more complex relationships between companies and the market as a whole.
Also find the chart for BHP and set yourself up a watch list!

Until next time.

Have a great day

John