Two Types of Savers
Here are some things to consider if you’re saving. In the current situation with the pandemic, the economy, the stock market, and the real estate market, there are two categories of savers, in my opinion. The first type of saver is the person who says, “You know, I am going to put my money in the bank because I think there is a bubble that is going to burst real soon, I think the stock market and the real estate market are all going to burst, so I am going to keep my money in the savings account, so it is protected and I’m secure.”
The problem with that type of saver is that the bank will not pay you any interest on that money, so it will just sit there and lose purchasing power every year because, whether we like it or not, things cost money, and a gallon of milk today will cost us more next year, so your purchasing power on the money you keep in your savings account is diminishing year after year.
The second type of saver is the Fomo Saver: fear of missing out saver, who says, “You know what, I am going to figure out a way to grow this money,” so they start watching YouTube, the news, or looking at Instagram or Twitter, and they start hearing all these people talk about these amazing investments that are out there, and because they don’t want to miss out, they decide, “You know what, I’m not going to do a lot of things.”
Understanding The Fact About Being A Saver
There is nothing wrong with saving or being a saver; I just want to make sure we understand that it won’t get us financial freedom. So, what’s the alternative? In my case, back in 2008, when I had to choose between saving and investing, I chose investing, but I chose to invest in a way that minimized the risk of losing my money.
I began to invest substantially in assets, ETFs, and index funds, as well as increasing my real estate purchases. Real estate in excellent communities that I could put attendant in, hold during the recession, collect some rent, and then as the recession turned around, that property started appreciating in value, increasing my net worth, so that’s what I did.
Best Practise of Investment Over Saving
I put three to six months’ found in the bank for an emergency fund, and the remainder of my earnings from my 9 to 5 job and side hustles went into two investments: real estate and the stock market via ETFs and index funds.
Only one percent of households in this country own nearly 70% of the stock market’s value, which means 99 percent of us are not investing. One of the reasons we don’t participate is because, as I previously stated, either we are on the extreme side of saving where we believe Armageddon is approaching and we want our money protected and we are terrified to death, or we are on the other extreme where we have not done any homework or research.
We have just listened to someone on YouTube or another social media platform, and now we are all in, whether it is day trading, options trading, or forex trading. As savers, we are on one end of the scale. We need to get ourselves in the middle, which is where we should be.
Quick Way To Lose Money is Through Saving Money
We need to start thinking about putting aside a three- to six-month emergency fund in a bank savings account. Now I am going to put the rest of this money into smart investments that will grow for me over the next five, ten, or fifteen years, and in my opinion, those smart investments are SMP500 or total stock market ETFs or index funds, and the reason I like those two types of investments is that they are passive investments, which means I don’t have to be an expert. If you go out and buy individual stocks, you have to be an expert.
That is a lot of strain for someone with no financial knowledge, and it is a lot of pressure for someone like me who has been investing in the stock market for 20 years. That’s why I stick to ETFs and index funds because I don’t have to be an expert. Instead of one or two enterprises in which you must participate, I am investing in a group of companies.
That is my opinion, and remember, this is just my opinion; you do not have to take my word for it; do your own research.
Conclusion
I am just an individual, but I am a guy who has been through some downturns in our economy, stock market, and real estate market. I have been through all three, and through them all, I just kept investing dollar cost averaging every single month, and now I am financially free, but guess what? I am still doing dollar cost averaging every month, and I am still investing in solid SMP500, ETFs and index funds, and total stock market ETFs and index funds.
I’m still investing in those things now; it’s my preferred investment. Your preferred investment may be something different, but the goal is to invest in something that will develop and build your wealth. Putting your money in a savings account, in my opinion, I will not do this.
Be a part of the one percent of investors that control or own 70% of the stock market. In most cases, the middle class is left out, and the reason for this is that we need to understand what is going on in the market; just because interest rates are low doesn’t mean everything will blow up in our faces. No! Guess what these wealthy folks do when interest rates are low: they buy assets and increase their wealth. Let’s take part in it.
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