Before you begin on your journey to building wealth and finding financial independent, it’s important you understand a few basics. If some of these tradeoffs don’t sound like much fun, try to keep your financial goals in mind. One of the big keys is that saving and investing are two related, but independent, processes that you shouldn’t confuse. A disciplined investor could find himself with dozens of real estate rental properties but unable to pay his bills if he didn’t appreciate the balancing act between the two foundations of success.
If you’d like to own your own home someday or pay off all your credit card debt, you need to plan ahead and set aside money to make your dreams a reality. But saving money can seem impossible when you’re already reaching to pay all your bills.
So define the difference between saving and investing;
-Saving is the process of putting cold, hard cash aside and parking it in extremely safe, and liquid (meaning they can be sold or accessed in a very short amount of time, at most a few days) securities or accounts. This can include FD, savings accounts or current account and of cause your private bank at home. The highest goal for these funds should be to keep pace with inflation but you should avoid risk at all costs.
-Investing is the process of using money (called “capital”) to buy an asset that you think will generate a safe and acceptable return over time, making you wealthier with each passing year. An investment can include anything from a small business to fine art, rare wines to gold coins, comic books to stocks, mutual funds, bonds, real estate, and antiques, just to name a few. It can also include song rights, patents, trademarks, or other intellectual property, as it is often called. Good investments are the soundest way of growing wealthy but can take time, perhaps even years, to work out because we live in an uncertain world.
Saving always comes first. Think of it as the foundation upon which your financial house is built. The reason is simple - unless you inherit a large amount of money, it is your savings that will provide you with the capital to feed your investments.
There are two primary types of savings programs you should include in your life. They are:
Plan A - As a general rule, your savings should be sufficient to cover all of your personal expenses, including your mortgage, loan payments, insurance costs, utility bills, food, and clothing expenses for at least six months. That way, if you lose your job, you’ll be able to have sufficient time to adjust your life without the extreme pressure that comes from living paycheck to paycheck.
Plan B - Any specific purpose in your life that will require a large amount of cash in five years or less should be savings-driven, not investment-driven. The stock market in the short-run can be extremely volatile, losing more than 50% of its value in a single year. Purchasing a home is a great example as we discussed in.
Only after that these things are in place, and you have, should you begin investing.
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P.S. My first book just release (image above). Basicly this book conduct you on how to save money in various ways. Complete guide to manage your money. So that you can make a saving anytime. No matter in good or bad economical situation.
P.P.S. Now available at most elite bookstore around the Malaysia or you can buy online here.
So define the difference between saving and investing;
-Saving is the process of putting cold, hard cash aside and parking it in extremely safe, and liquid (meaning they can be sold or accessed in a very short amount of time, at most a few days) securities or accounts. This can include FD, savings accounts or current account and of cause your private bank at home. The highest goal for these funds should be to keep pace with inflation but you should avoid risk at all costs.
-Investing is the process of using money (called “capital”) to buy an asset that you think will generate a safe and acceptable return over time, making you wealthier with each passing year. An investment can include anything from a small business to fine art, rare wines to gold coins, comic books to stocks, mutual funds, bonds, real estate, and antiques, just to name a few. It can also include song rights, patents, trademarks, or other intellectual property, as it is often called. Good investments are the soundest way of growing wealthy but can take time, perhaps even years, to work out because we live in an uncertain world.
Saving always comes first. Think of it as the foundation upon which your financial house is built. The reason is simple - unless you inherit a large amount of money, it is your savings that will provide you with the capital to feed your investments.
There are two primary types of savings programs you should include in your life. They are:
Plan A - As a general rule, your savings should be sufficient to cover all of your personal expenses, including your mortgage, loan payments, insurance costs, utility bills, food, and clothing expenses for at least six months. That way, if you lose your job, you’ll be able to have sufficient time to adjust your life without the extreme pressure that comes from living paycheck to paycheck.
Plan B - Any specific purpose in your life that will require a large amount of cash in five years or less should be savings-driven, not investment-driven. The stock market in the short-run can be extremely volatile, losing more than 50% of its value in a single year. Purchasing a home is a great example as we discussed in.
Only after that these things are in place, and you have, should you begin investing.
___________________________________________
P.S. My first book just release (image above). Basicly this book conduct you on how to save money in various ways. Complete guide to manage your money. So that you can make a saving anytime. No matter in good or bad economical situation.
P.P.S. Now available at most elite bookstore around the Malaysia or you can buy online here.
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