Investing for the future
How do you want to invest your money? Do you want to give your decision to a middle man, usually a person in bank, who then proposes a fund or two? You probably see the structure of that fund, some of them familiar companies, some not. Depending on the assumed risk profile, your service provider gives you an estimate of the yearly earning on that capital. He might propose also that you that if things change in the markets, he would reallocate your capital accordingly. Being active in the stock market helps to find short-term opportunities and make full use of that.
Or do you go a bit further and decide to be your own middleman, taking decisions independently? Either you buy shares via stock exchange, using some service providers. Or, which is something new, you go into one of these crowd-funding schemes and buy a stake from an enterprise that is doing exactly the stuff you like: making good coffee or building a service that helps to reduce energy consumption or helping young people into labor market.
Most of us are not real players, I believe it is rather a tribe of its own. Instead, we want to invest into something we believe it is good and will also deliver in return. We want to invest for long, rather than for short-term. Financial services providers up to now has been not very helpful in giving us opportunities like the ones above. But this scene is really changing now.
I think the big movement was unleashed with Kickstarter, that has gathered already some 700 million dollars for various creative projects and enterprises. In Finland we have initiatives like mesenaatti.me, that do the same thing. These platforms attract the people that want to see their money go to some interesting and useful purposes.
And if you think about there are couple of things that prompt these sort of development. First, people have become frustrated that there are no real alternatives. You know what I mean: yes there are innumerable funds available but not real alternatives to them. Second, there is a huge problem with transparency. It is quite often really hard to learn how much you exactly pay for your service provider. And what about your middle man: is he objective in recommending to you funds to invest or is he picking up those ones he gets the best provision for himself? I have seen quite a few rather obscure scenes where all this is hidden behind the polite smile.
Eventually it is all up to us. If we really want to gain control over our money, we should do like Warren Buffett: invest only on things we can understand. With new means available we can actually do this in a much easier fashion than before. And if financial crisis should teach us anything, it is really a story of people not understanding where their money go.