“It’s not how much money you make, it’s HOW YOU SAVE IT AND MAKE VALUE FROM IT.”
True enough that saving money has been historically a virtue and most of us, especially the young ones are just putting their money in the banks. But, we know that if the money is only in the banks, either it only increases with a little interest or not at all.
Savers are Losers
It’s a good thing to save your money in bank or you have your emergency funds within your reach when financial needs gets tough. But, almost on a daily basis, the money we kept loses its value. Savings account and emergency funds are not enough (to be honest) and it does not boost your savings to keep up with our global financial and economic climate.
Famous influencer and author of Rich dad and Poor dad, Robert Kiyosaki stated in his book that “savers are losers.” To better understand this, it was said that his Rich dad had him understand how to save better by buying assets and looking at the definition about what “fiat money” is.
The Fiat Money System
The world currently revolves in a fiat money system. Fiat means a command or act of will that creates something without or as if without further effort.
Fiat money is a paper money. We use inconvertible money made legal tender by a government decree, but this is not backed by physical commodity. Its value is dependent on the supply and demand rather than the value of the material that the money is made of.
Therefore, if all government in the world were to collapse their currencies, then their money would have no value at all.
Commodity Money and Converting Savings to Assets
Saving is rewarding when one saves in order to buy something valuable. A better example of this is the value of commodity money.
Commodity money is known for its colloquial term, “old money”. Not all money is the same and the nature of money over the course of history has undergone change. A long time ago, old societies used “old money” or commodity money like gold, silver and other metals, with each value in of itself.
Therefore, saving up is rewarding when we save in commodity money. This is because, the value of commodity money is preserved and the compound interests is accruing.
Therefore, if one had purchased assets in gold, silver and real estates, they are sheltered against inflation and preserved their assets’ value.
However, like any other markets, gold and silver tend to get inflated too. The rise of its demand has been steady but these assets has got its shares of booms and busts.
It’s a matter of Wise Investing
The key to successful saving and investing is when one does the opposite. You save the money buy investments. That is why investors, save cash and convert them into assets of gold and silver when the stock markets are booming.
A booming stock market sucks the money out of other markets and gold and silver are no exception. It is during this phase that the market plummets and investors find a good bargain.
Conclusion
Overall, it all boils down to one point, traditional saving of cash in bank accounts is doomed for failure. Real investments is getting it from gold, silver and real estates providing you with hedge. Therefore, as early as now, convert cash into commodities at intervals.
