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Why Reading Is Critical To Your Financial Future

Are you reading enough?

The Straits Times recently published an article to advocate making reading a compulsory subject in school. The article indicates that research has shown that reading improves grades, and nurtures better citizens.

People like to say that they hope to start investing in stocks and reading up more on investment strategies. However, not many people actually get around doing it. The usual excuse would be, “I don’t have the time!” or “I tried, but reading investment books are soooo boring!”

Cultivating the habit of reading will benefit you in your life, especially when you try to gain financial literacy and become a better investor. Here’s how reading can impact your financial future.

The Onslaught of Technology

In this day and age, when we want to learn more about a certain topic, Google is our best friend. We search, we click, we learn.

While the internet will offer you opinions of people that a book may not offer in a succinctly written prose with bolded headers, it is important to determine the credibility of the news you read online. As the saying goes, not every thing you read online would be true.

When it comes to personal finance matters, this is even more important to remember. The topic at hand is your financial future, not what you should eat in your next meal, or where you should stay during your holiday.

Confirmation Bias

When we Google something, we tend to search for things that validate our own beliefs, thus we find more in-depth information that confirm them, leading to fallacies in the new information we imbibe.

On the flipside, when the reader encounters information that contradicts his views, he tends to reject the alternative view, or treat it with skepticism. This phenomenon is called cognitive dissonance What this means is, there is a limited perspective available to us when we usually do a web search because we seek what we desire to find.

For example, someone who wants to start investing may be searching “How to Invest in Stocks”, but reads & remembers only the information that aligns with his desire to get rich quick. Many websites do not provide in-depth knowledge or proper tools in stock investing simply because adequate coverage requires an ebook consisting of many pages that an article alone simply cannot provide.

Stock investing requires plenty of reading, and a whole lot more of discipline to tolerate the dry journey to financial proficiency, and patience to understand, and digest the information given. Learning about fundamental or technical analysis will bring up many related subtopics. For technical analysis alone, mastering candlestick patterns and chart indicators will require books on those respective tools.

Read Also: 3 Common Psychological Mistakes To Avoid While Doing Investment Research

Books Come To The Rescue

It is easy to do a quick search on the web, and the lack of time is an easy excuse to avoid reading a proper book written by a credible author who is an expert on the topic of your interest.

The purpose of financial articles online is to give you the big picture on the subject you are looking to learn more about, and it is your prerogative to take charge of your learning by reading a book that specifically teaches you about it.

Authors of investment books must have sufficient credibility, including an impressive portfolio, years of experience, and for some, fame. Their books, written at length, would explain extensively with examples the various concepts and charting techniques that articles are unable to cover, but can simply summarise the points for their busy readers’ benefit.

Should Reading Become Compulsory?

The word “compulsory” itself is daunting, implies reluctance, as well as the compromise of our free will. Given the benefits we have provided about how a habit of reading can help make you a better investor, making reading a compulsory subject is a different debate.

The Pros: Why Make Reading Compulsory

Finance books are boring to read for beginners. This is especially so for those who do not like number, charts, and even business news. By compelling children and adolescents to read for the sake of their exams, they may be trained to adopt reading as a habit.

Also, fictional novels tend to be chosen for a compulsory subject like reading. When students are exposed to captivating novels, they are likely to feel encouraged to read frequently and more extensively. Taking novels as the first of many baby steps towards more complex content like business news, financial reports, and investment books can be an arduous process. Nonetheless, the financial security in the long run will certainly be worthwhile.

The Cons: Why Make Reading Non-Compulsory

Making reading a compulsory subject takes the fun out of reading. When things become examinable, stress is brought up whenever we try to tackle the subject because for students, the end goal is solely to score well. The meaning behind reading as part of enjoyment will be lost.

When something is forced, the reading culture may not sustain. Students will simply want to get over and done with the subject the moment their invigilators declare “pens down”, and not remember anything about what they have learnt years after the have taken the subject. The reason is simple: students will associate reading to the stress that they faced preparing for the examination. Now, that would be counterproductive, don’t you think?

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