Marc explained some mutual fund basics yesterday in “Why A Mutual Fund Makes More Cents”. It’s a good introduction to the topic. But the necessity of the article highlights a problem that  often frustrates me  – the general lack of knowledge about investing.

Unless you make loads of money, you absolutely have to invest if you ever want to retire. OK, so there are a few exceptions to this. If you have a traditional pension, or you’re planning on severely cutting back expenses, or you have some reason to believe Social Security will still be there for you, maybe you can get by without investing your savings. But for most workers today, investing is not optional – it’s required if you want to have some semblance of a secure retirement.

Getting an early start is also critical. Any retirement calculator illustrates this. The less you make, the more important it is to start early. Someone with a high income can slash expenses and start stashing money to make up for early mistakes, but lower income earners can’t.

Even if you decide to invest and you get an early start, investing does not automatically result in a successfully funded retirement. You have to get some basic investing decisions right – like not putting all your 401k contributions into company stock. It takes a little bit of time and effort to learn the basics.

Given that this is a critical skill that should ideally be learned early in life, how do people get to my age without learning the basics? I’m speaking from experience here. I’ve dated several men in their early 30s who had no real concept of how a mutual fund works. I didn’t either, until my late 20s. I’m sure that my own failure to start investing early is really the source of my frustration.

Of course, it’s not the end of the world if you don’t start planning until you’re 30 or 40. You still have time to invest enough for a nice retirement. But if you start 10 or 20 years earlier, the difference is huge. We’re talking hundreds of thousands of dollars, even with relatively tiny investments. My retirement will be just fine as it is, but if I had started on it when I was 18 years old and working at Jack In The Box… well, just play with a retirement calculator and see for yourself.

Am I the only one who is constantly surprised that basic investing knowledge is not seen as something you simply must have? Our parents and our schools manage to teach us how to procreate, and if they don’t then the kids a few years older fill us in. Shouldn’t financial planning, including investing, go along with that?

Fortunately, learning about investing is not that hard, and there are some good online resources you can use for free. Personal finance blogs like this one can get you started. If you want something more structured, Morningstar’s investing classroom is a fantastic resource. It begins with the basics and gets fairly advanced.

If everyone has some basic investing skills, we’ll all be better prepared for the future. And we’ll even make Marc’s life easier by not calling him in a panic every time the market dips.