Would you be illiterate?

booksThere was a time, a mere few hundred years ago, when most adults could not read or write. Literacy was the domain of the rich, and of others with power, like clergy,  healers and scholars. And while the ability to read did not automatically confer power, it was a stepping stone of some value.

Fast forward four hundred years. Even today, denying any group a basic education is equivalent to denying them power in society. But the world has grown far more complicated.  Along with flush toilets and stain removers, we have new kinds of literacy. Computer literacy, for starters. Older adults who refuse even the basics of email and cell phone usage are slowly relegating themselves to the sidelines. On the other hand, those of any age who bother to learn the basics of nutrition, medicine, law and even geography are better equipped to navigate life. Knowledge isn’t power, but it is one of the prerequisites. We choose ignorance at our own risk.

moneyYet of all the types of literacy we can benefit from, none seems to be more intimidating even to intelligent, educated people than the one that ties directly to power: money itself. This amazes me.

My financial education began several years ago when I was laid off by the company I worked for for two decades. Along with the expected problems, I found myself with a 401K plan that had been quietly growing in the background. Lucky me. I had the option of leaving it where is was, but I was far too pissed off at the company to leave any of my money in any thing that bore their name. So silly anger inspired me to learn enough to make a roll-over into an IRA. That wasn’t the end of it though. Most of the funds in the IRA were still in the hated company’s stock, which was now doing very well given that Wall Street always loves a good lay-off. So, I sold the stock.

bankersI quickly discovered that the investment community was (1) quite good at finding people in my shoes and (2) quite persistent about letting me know how well they would treat me and my money if I would just turn everything over to them. The louder they clamored, the more cautious I became.  I figured that if so many people wanted to handle my investments so badly, it had to be a very good deal for them. Which meant it probably wasn’t a particularly good deal for me.

Slightly paranoid contrarian that I am, I decided to learn to handle my own investments. I figured I had two years of college calculus. I could explain special relatively to my sister. If all of these guys calling me could all understand investments, so could I. How hard could it be?

Well, I made a lot of stupid mistakes. The good news was that I made them in little tiny increments, because at least I knew that I didn’t know much. I made baby-sized bad investments and itty-bitty good investments. Yes, I did make only a pittance off of stocks that did great because I’d only invested a pittance to begin with. I let a lot of cash just sit there doing nothing while I made spreadsheets and read a lot of stuff I didn’t really think I cared about on the Fidelity and Motley Fool websites.

27-Courage-Quotes-14I did sign up for some services that make recommendations for individual investors. Some were so much of a rip-off that they ought to be shut down. Others were useful and I began to pay a little more for their more elite recommendations. I learned to hold my nose at terms like “preserving wealth” and to buy stocks in companies I didn’t like. I learned to sell stocks I did like. I played with stops and limits and then I experimented with short-term trading. I tried basic options investing, learned how to by higher risk corporate bonds all by myself, and checked out index funds. As long as I only used a little money at a time, and kept track of absolutely everything, I discovered that I could learn a lot.

So. I wasn’t rich before I started and I’m not rich now. I think for all of my effort I about match what the S&P has done over the seven year period that I’ve been doing this. That is fairly remarkable, considering all the dumb mistakes I made. I could well have pissed away what savings I did have, but caution and variety were my friends.

high-frequencyBut wait. I’m way richer in one way. I’m now literate about money. Me, who always thought the stuff was kind of evil even though I liked to spend it. What’s more, I find that I understand the politics of money better. I get how those with wealth can make more wealth and not even realize how easily they are doing it. No evil intended. I get how our system is skewed toward the investor. I get the reasons this is good, and the reasons why this makes our society increasingly lopsided, and allows some of those who are talented and hardworking to still be barely able to get by. I’m not powerful, but I’m literate in a language of the power, and that matters.

Why mention this on a writing blog? Not to brag; I hope there is no bravado in this tale of me stumbling along powered in part by mistrust and in part by anger with a former employer. Rather, I want to share a second facet of this that baffles me.

What I know makes its way into my writing. You’ll find geology in x0 and physics and anthropology in z2. And you’ll find a fair amount of information about wealth in y1 and some basics about the the stock market in d4. Some readers could do without this sort of thing, and I respect that. I do try to keep my fun facts short and relevant to the story. Other readers seem to enjoy them, which is nice. I’ve received praise for my bits about the South Pacific, about anti-depressants, about the sex trade, and the Buddhist path to enlightenment. Only the stock market seems to leave people cold.

“I skimmed over it.” “I don’t understand that stuff.” “I don’t care about money.” It seems that readers, both friends and total strangers, have the biggest block of all when it comes to learning about the financial world. I’m not saying I’m the world’s greatest teacher. But the same people who gamely followed along with entanglement theory and immigration law had a much harder time opening their minds on this subject. That’s cause for concern.

In a world with increasing income disparity, and with the jobs that create wealth the fastest coming from the financial sector, doesn’t it behoove us all to understand that “sector” a little better? I think it does. It’s not that complicated to learn. And while the ability to understand investments will not automatically confer power, it will be a stepping stone of some value. Knowledge isn’t power, but it is one of the prerequisites. We choose ignorance at our own risk.

You don’t need to know this stuff because you have a little money to invest. You need to know this because your world is increasingly run by those that do.