*What to Do First to Increase Financial Literacy*
When I first started in college, I literally didn't know where to start. I listened to others' advice such as listening to finance/business podcasts & news and reading business & finance news/websites like WSJ, Seeking Alpha, Market Watch, Investopedia, etc.
But it wasn't short or direct. I felt lost because I was reading, finding, and gaining a lot of information, but learning them without knowing how they are pieced together or how to use them. Throughout elementary, middle, and high school, I never focused on politics and economy, thus not knowing any of its languages/jargon or important events. The term GDP was even new to me. Moreover, I didn't know what banks did, what the financial market is, and what Warren Buffett does (I knew he was famous and rich, but I thought he was the CEO of some company just like Bill Gates).
Anyways, my first-time journey into finance ended up in failure. After learning that basic accounting knowledge was crucial, I tried understanding the financial statements (income statement, balance sheet, cash flow statement), but those seemed complicated and daunting at first. It was like having all information out without sorting them into categories. I think textbooks are great since they have the 'table of contents'. We know this is the most important part of any learning tool: To know exactly what we'll be learning and what to focus on/what's the central/main idea or concepts.
Well, for finance, there was no easy 101 or direct information (all there but choppy, people with good analytical skills might have pieced them together but not me). I still didn't know anything, didn't get a clear picture yet.
Heck, I didn't even know what business was. Didn't know what each business field/sector meant. What was the exact difference between accounting, finance, economics, business, trading, consulting, and marketing? I picked up the definitions, but they meant nothing to me. So, I got to know: Accounting is looking backward, listing all the company activities (usually boring and repeating activities, an audit is an important feature of accounting); Finance is looking forward with many extra calculations (usually dynamic and new information/models & equations/tools pop up); Economics is more focused on a wide scope, focusing on the companies & consumers, countries, international trades, etc., meaning it's theory-based more than either of those two (accounting and finance).
Yet these descriptions/definitions were someone else's words. Yes, they had meant nothing because I didn't click with their definitions. If it was me now, I wouldn't really describe them like that. The definitions are true, but they lack the answer to what they really mean and let the question keep building on (what is backward-looking, or forward-looking? Is that like the back-end, front-end office? What are those?). No example of the difference.
This was like hearing someone's name and getting a basic introduction but not knowing anything about that person. So, I moved on and tried to gather more, learn more--something that would explain everything so simply, and categorize them for me. In short, that didn't happen. I don't think there are any other places that do this. After almost 8-9 months of constantly trying to crack/figure this out, I think I finally got a layout of what each is.
In Finance, it is crucial to know:
* Key terms (accounting, finance, investing, trading // securities, bonds, stocks)
* Asset classes: securities
* The process/steps (how to do equity research, how to find good value stocks, how to evaluate companies/stocks)
* Stock pitch prep:
1) Finish DCF (I think I can do this now// valuation books, WSP, DCF excel examples)
2) Find a list of stocks (Finviz screener >> Morningstar & Spotify podcasts >> read through 10-K) then gather info
3) Analyze its structure (10-K, company website, news, YahooFinance >> Industry & Company analysis + Comps/DCF)
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