Investing
Why do we invest? For college or retirement? For a new home or new car? For your children or grandchildren? The reason varies depending on your season in life, your ambition and your goals.
Why do some people collect vast fortunes and others almost nothing? If we ignore those that inherited a fortune, which in most countries of the world is a tiny minority, then all the rest who are rich created their fortune in their own lifetime. In the United States of America, the epitome of capitalism, where more fortunes have been created in the last two hundred years than in any other country in the world still some accumulate and others do not. What prevents those that do not accumulate and assists those who do?
Let the wisest man who ever lived answer on my behalf.
For wisdom is better than rubies: and all the things that may be desired are not to be compared to it.
Proverbs 8:11
Riches and honor are with me; yea, durable riches and righteousness. My fruit is better than gold yea, than fine gold; and my revenue than choice silver.
Proverbs 8: 18 & 19
That I may cause those that love me to inherit substance; and I will fill their treasures.
Proverbs 8: 21
The answer? Wisdom. Financial wisdom. Why if it is so important is it not taught in high school or college? Yes you can become a CPA but many CPA’s work for people who never went to college. You can become a Certified Financial Planner or a Financial Adviser yet these too mostly work for others who have accumulated wealth and may or may not be as well educated as them. Generally speaking the better educated a person is the better chance they have of earning money but not necessarily accumulating wealth. Why is this? Lack of wisdom in financial decision-making is the main answer.
Wealthy people do not necessarily have a high income, in fact some high-income people couldn’t write a check for $5,000.00. People who are wealthy, either themselves, or their ancestors, have been able to save out of their previous income. If you spend all of your annual income during the year, then your wealth cannot increase, but if you save 2/10 or 20% of your gross income then your wealth will increase.
I have met people with net worth’s of $600,000 plus, who never earned over $34,000 per year their whole working lives. How did they do it? It is quite simple; they saved and put their money (Talents) to work.
Jesus said that the poor will always be with you and as we look around the world today we see that this is still true a few thousand years later. In this day of instant access you may wonder why? But with instant access comes instant excess and this is one main reason. Bad habits create bad debt and bad debt creates poverty. In some countries the poor have no choices because their corrupt governments rob them but in the USA almost anyone has the opportunity to become financially independent.
So why do so many not achieve this? Well for a start it is boring or at least it should be while you are laying the foundation to your wealth through index funds, bank CD’s, and other “safe investments”. If you examine the portfolios of the rich you will find many of them in tax-exempt funds charging minimal fees with low trading expenses and operating costs.
So how do you become an investor? Simple first become a saver. Just as losing weight is a simple combination of eating less and moving more so becoming rich is a simple combination of saving more and spending less.
The only path to success lies in saving one dollar at a time so ask yourself what utilization will this purchase bring me? And what is the cost of that utilization. Everything you do has a cost be that hidden or obvious. Please get in the habit of saying to you what are both the short and the long-term cost of this decision. What is the chance of success or failure of this investment?
And remember above all you have to give to receive so ask yourself why do smart intelligent people give away money? The answer like everything else is written in your heart.
Why do some people collect vast fortunes and others almost nothing? If we ignore those that inherited a fortune, which in most countries of the world is a tiny minority, then all the rest who are rich created their fortune in their own lifetime. In the United States of America, the epitome of capitalism, where more fortunes have been created in the last two hundred years than in any other country in the world still some accumulate and others do not. What prevents those that do not accumulate and assists those who do?
Let the wisest man who ever lived answer on my behalf.
For wisdom is better than rubies: and all the things that may be desired are not to be compared to it.
Proverbs 8:11
Riches and honor are with me; yea, durable riches and righteousness. My fruit is better than gold yea, than fine gold; and my revenue than choice silver.
Proverbs 8: 18 & 19
That I may cause those that love me to inherit substance; and I will fill their treasures.
Proverbs 8: 21
The answer? Wisdom. Financial wisdom. Why if it is so important is it not taught in high school or college? Yes you can become a CPA but many CPA’s work for people who never went to college. You can become a Certified Financial Planner or a Financial Adviser yet these too mostly work for others who have accumulated wealth and may or may not be as well educated as them. Generally speaking the better educated a person is the better chance they have of earning money but not necessarily accumulating wealth. Why is this? Lack of wisdom in financial decision-making is the main answer.
Wealthy people do not necessarily have a high income, in fact some high-income people couldn’t write a check for $5,000.00. People who are wealthy, either themselves, or their ancestors, have been able to save out of their previous income. If you spend all of your annual income during the year, then your wealth cannot increase, but if you save 2/10 or 20% of your gross income then your wealth will increase.
I have met people with net worth’s of $600,000 plus, who never earned over $34,000 per year their whole working lives. How did they do it? It is quite simple; they saved and put their money (Talents) to work.
Jesus said that the poor will always be with you and as we look around the world today we see that this is still true a few thousand years later. In this day of instant access you may wonder why? But with instant access comes instant excess and this is one main reason. Bad habits create bad debt and bad debt creates poverty. In some countries the poor have no choices because their corrupt governments rob them but in the USA almost anyone has the opportunity to become financially independent.
So why do so many not achieve this? Well for a start it is boring or at least it should be while you are laying the foundation to your wealth through index funds, bank CD’s, and other “safe investments”. If you examine the portfolios of the rich you will find many of them in tax-exempt funds charging minimal fees with low trading expenses and operating costs.
So how do you become an investor? Simple first become a saver. Just as losing weight is a simple combination of eating less and moving more so becoming rich is a simple combination of saving more and spending less.
The only path to success lies in saving one dollar at a time so ask yourself what utilization will this purchase bring me? And what is the cost of that utilization. Everything you do has a cost be that hidden or obvious. Please get in the habit of saying to you what are both the short and the long-term cost of this decision. What is the chance of success or failure of this investment?
And remember above all you have to give to receive so ask yourself why do smart intelligent people give away money? The answer like everything else is written in your heart.
posted by Wisdom at 9:06 AM
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