How many times have you heard the mantra, “Save for a rainy day”. Can’t go wrong, right? Well, that may have been true in our parents’ or grandparents’ days, but I argue that the validity of that advice has come and gone, and has little place in our world today if your main goal to build wealth.
Why would I knock down a tried and true saying? Perhaps because the interest from what banks would call a “high-interest” savings account would give you around $2 for every $100 you have in a bank over a period of one year. And those accounts generally require you to keep a minimum balance of $500.
Two dollars. That’s all your will earns in a savings account in a year. Price of a coffee. Would you be happy with that rate of return if your main objective is to grow your wealth that would make a difference in your life 1, 5, 10 years from now? Would you be willing to tie up $1,000 for a year, just to earn $10? I think not.
So what’s the alternative? Repeat the new mantra: “Invest for a rainy day”. Everyone should learn about investing and find our what type of investments and what style of investing is right for you. Of course I am not saying investing will guarantee you would generate better returns that a savings account, and, there is a chance that you could even lose some of your capital. But if you do your homework, take the time and effort to learn the ropes; find out whether you’re best to be a do-it-yourself investor, or you can work with a financial professional (a planner or advisor). Maybe you want to invest in real estate. Or, maybe invest in other businesses. You’re the only person who will know what investments are most suitable for your life and your personality.
The first step, however, is to learn about investing, and find out what works for you.
Let us know below (in Comments) what investment topics you would like to know more about. Honeymoneymakers will be sure to give you the goods ourselves or to suggest the best resources for you to go to.
So remember the new mantra. “Invest for a rainy day”.