You can’t save your way to wealth
Saving for a rainy day is not the same as saving to be wealthy. You cannot save your way to wealth. This is an age old truth that is especially true with today’s low interest rates. Did you know with a savings account earning .5% it will take 144 years for you to double your money? Saved money today isn’t growing money. It’s stagnate money. In fact, if it isn’t keeping up with inflation, it is losing money.
You must invest your money to become wealthy and to keep your money relevant with the rising cost of living. Is that to say saving money is a bad thing? No. You can save to get to the amount you need to invest. In most cases $25,000 is a magic number. Sometimes you can start with less, it just depends on the programs you have access to. Here are 4 tips for growing your money today:
- You must have a plan. If you don’t have a plan for you money, it gets spent. Having your money assigned to a purpose or account will ear mark your money before you even earn it. For examples if you make $5000 in a month and your plan is to save $500 a month, then that money has an assignment and won’t get over looked. I treat my savings like a bill. Like an obligation to myself. Assign your money a purpose. This money is being saved for my investment fund. This money is being saved for my real estate fund. Etcetera.
- You must save to invest. Savings should be a major part of your plan. A portion of all you earn is yours to keep. A minimum of 10% is a good starting point. Most people don’t realize that if they save just 10% of their income, in 10 years they will have a years worth of income saved. That’s freedom money. Knowing you can sustain yourself for an entire year is one of the most empowering feelings you can give yourself. Saving is what creates the discipline to be a good steward of money. It makes money have purpose in your life and it makes it important because you had to postpone instant gratification to get a lump sum of money together. Now you can put that money to work.
- Don’t press your money to impossible earnings. So you’ve saved all this money and now you can invest. Don’t invest without fully understanding the company, product or strategy you plan to hand your hard earned and hard-saved money over to. Lack of knowledge kills many investments, leads to scams and will hurt you down the road. Empower yourself with knowledge. Don’t push your money to earn too much too soon. Don’t put all your eggs in one basket. Especially a basket you don’t understand. Have a very clear understanding of how your investment will grow and how the company generates income.
- Avoid the stock market with most of your money. The stock market is a zero sum game, meaning in order for someone to win, someone else must lose. There are no win-win situations on Wall Street. If you are playing against the big companies or the 1% that own 50% of the market, you will lose. Don’t invest or gamble against groups that have buildings full of analysts. You can’t time the market and someone has to lose. The stock market isn’t wholly evil, it’s just designed to ensure the house always wins. Think about everything you know about the stock market and then ask yourself if that same information describes a casino. See, don’t waste your money gambling.
The largest percentage of people on Forbes Billionaire list is investors. No one is there because they saved a billion dollars. They are there because they built up investment capital and then put it to work. They then saved the earnings from their investments and put those to work, further compounding their growth and success.
https://www.youtube.com/watch?v=rI5VYeveRJw
You can’t save your way to wealth, but you can be wealthy. To become wealthy you must save your way to investment capital and then invest your way to wealth. It is still possible today. Save the money. Understand the investment. Invest the money and watch it grow. Then repeat!
Stephen Gardner
To learn more about where to safely save and grow your money reach out to us. If you have your investment capital already, let us show you where to grow and increase that capital in the same places as our wealthy clients. Did you know you can take control of your IRA, Roth IRA, Sep IRA and become self-directed? This level of control leads to huge wealth and a world full of investment opportunities.
