Don’t Be Afraid To Invest Your Money

Wealth Is Measured in Time Not Money

“Wealth is the number of days a person can live without physically working and maintaining her standard of living.”

Let’s say your monthly expenses are $ 1000. If you have $ 3000 in your savings account, your wealth means 3 months or 90 days. Wealth is measured in time, not money.

After all, it is not how much money you make, but how much money you can keep and how long you can increase the money. I know many people who make a lot of money every day, but most of their income goes to the spending column.

If their income increases, they consider buying a bigger house or a new car. This means long-term debt and hard work, so nothing is left for the asset column. Money runs out quickly.

“Going in Red” Shortens The Life Of The Engine

To go in red is to continue driving even though the gas gauge drops empty. This phrase is also used to describe going at full speed.

Whether rich or poor, there are many people who always “go in the red”. No matter how much they earn, they quickly spend what they get. “Going in red” shortens the life of the engine.

According to many doctors, the main cause of stress today is hard work and not making enough money. Especially some people insist that “wallet cancer” is the biggest cause of health disorders.

Money Works for You So You Don’t Have To Work

No matter how much money people make, eventually they have to use some of it to invest. Investors are more interested in making money out of money. This is also the idea that money works for you so you don’t have to work. But the important thing here is to know that there are other ways to invest.

Other Ways to Invest

People invest in their education. Traditional education is important because the better you study, the better your chances of making money. If you devote four years to college, you have the potential to earn between $ 24,000 and $ 50,000 a year or more. Considering that an ordinary person actually gives 40 years to work, studying at a four-year university or similar institution can be a very good investment.

Loyalty and diligence are also another means of investment, for example a lifetime working in a private company or a government agency. The reward for this is the retirement bonus and lifetime pension, as well as the right to various services. However, this type of investment, which is valid in the Industrial Age, has lost its validity in the Information Age.

Others invest in a crowded family and want children to take care of them in their old age. Such an investment used to be good, however, due to today’s economic difficulties, families are no longer in a position to meet the living and health expenses of the elders.

There are also independent pension investment plans called individual pension plans. The federal government provides tax relief for incentives to both employers and workers so that they participate in these plans.

Income from Investments

Although all of the above are investment tools, people who invest are more concerned with a continuous source of income than these. Are you currently deriving your income from your investments? In other words, does your money work for you and generate income for you?

Let’s look at someone who buys a house for investment and rents it out. If the rent he receives is more than he has to spend for that house, it means cash coming from investments. The same is true for those who earn interest on their money in the bank or receive dividends from stocks.

Advantage of Earning Income From Investments

The main difference that separates those who make money from their investments from others is to make money from money. If they succeed in this, they can run their money, and the next few generations of members of their family also benefit.

In addition to the obvious advantages of knowing how to earn money from money and live without having to get out of bed in the morning and go to work, there are also tax advantages that are not available to those who work to make money.

One of the reasons the rich get richer is because they earn millions but do not pay taxes on that money. Because their earnings are included in the “active column”, not the “passive column”. Or they make money from their investments, not physical work.

Those who work to make money are not only subject to high taxes. Also, a certain tax is deducted from their wages, that amount goes to tax before they even get it.

Why Are More People Not Being Investors?

Investing means working less, earning more and paying less tax. So why don’t more people become investors? For the same reason as the small number of people starting their own business. In one word, we can say because of “risk”.

Many people are afraid of losing money when they are investing it somewhere. Even if they know how much their investments may earn them, they avoid investing and risking their money because they are afraid of losing.

Fear of losing money divides investors into four classes:

1. Those who avoid risk, love guarantees and keep their money in the bank

2. Those who leave their investment decisions to experts such as financial advisors or mutual fund managers

3. Gamblers

4. Investors

We can distinguish between the gambler and the investor as follows: According to the gambler, investment is a game of chance. For those who hand their money over to someone else to invest, investing is a game that they do not want to learn. It is important for these people to be careful when choosing financial advisors.

It’s Time to Become an Investor!

The defined and predictable plans of the Industrial Age are gone. As the Information Age shifts to specific retirement plans, everyone has to be responsible for their own finances. However, the number of people who realize this is very few.

I urge you to read my WHY YOU NEED TO INCREASE YOUR FINANCIAL IQ post.

If you are interested in investing check out these:

Here you can find all my posts in investment category.

My latests posts:

Taxes and Credit Debts

All over the world, taxes are rising steadily. Because the social demands in return for the tax charge require an increase in the value of wealth, income and sales taxes. Higher incomes cause taxpayers to enter even higher tax brackets. Thus, tax rates increase gradually to meet social services. Today, governments face serious problems with social service programs such as Social Security and State Health Insurance for the elderly. As a result, they cannot pay their debts.

For most people, taxes are the biggest expense item. Most people consider these taxes are income taxes. However, for most developed countries like America, the highest tax is the premium paid to social security. Employees pay roughly 7-8% tax on social security contributions and health care. However, this rate is actually 15% since the employer pays the social insurances to complement this rate. This is the amount that the employer cannot pay the worker. Moreover, the employee also pays the income tax of social security contributions deducted from her salary. In fact, this is an income that she never received since it goes directly to social insurances.

Let’s explain this subject with a simple example. Imagine a newly married couple. This educated young couple rented a small flat. They start making some restrictions to make a living. After a while, they realize that they are spending as little as they did before they got married. So, they save some money.

But one day, the flat they rented starts to seem too small for them.

They want to buy a bigger house to have children. Now, they want to save more money. They start working more.

Their income gradually increases.

As their income increases, so does their expenses.

When they think they have enough money, they buy their dream house. Meanwhile, they learn about a new tax called property tax. Over time, they buy furniture for their new home. They also buy a new car . They suddenly realize that their column of passive funds is now filled with mortgage debt and credit card debt.

They finally have a child. The couple work harder. The same process repeats. The more they earn, the more taxes they pay. They get new credit cards. Their debt increases gradually and becomes equal to the value of their homes.

A company that provide loans to the couple recommends “debt consolidation” while the couple’s credit ratings are high. The company also states that the best thing to do is to pay off their credit card debts and high interest consumer loan debts. Besides, interest on home loan will be deducted from tax. They accept and pay high interest credit card debts. They feel a little relieved. Credit card debts are over. Now they have added their consumer loan debt to the house mortgage debt. Loan installments decreased because they extended the repayment for another 30 years.

Discounts begin in various stores and markets. The couple do not intend to buy anything, they just want to go and walk around. But they also take their credit cards in case they see something necessary…

We often meet this young couple. Their names are different, but their financial dilemmas are the same. They all look for an answer to “How can I make more money?” question.

The real reason for their financial problems is that they don’t know how to spend their money. They don’t have financial knowledge; they do not understand the difference between active and passive funds.

Let me say it again: Earning more money is often not the solution to financial problems. The solution is to act wisely. There is a famous quote for those floating in debt:

“If you find yourself in a hole, stop digging.”

Will Rogers

We must be aware of three powers: The power of the sword, the jewel, and the mirror. The sword symbolizes the power of weapons. America has reached this position by spending millions of dollars on weapons. Jewelry is the power of money. Whoever has money sets the rules. The mirror symbolizes the power of self-knowledge. Self-knowledge is the most valuable of these three, according to Japanese legend.

The lower and middle classes are willing to let the power of money control them. They shoot theirselves in the foot by getting out of bed and working hard, not asking themselves what they are doing. Many who do not understand money, surrender to the power of money. The power of money is used against them…

You can continue reading with THE ROBIN HOOD IDEAL.

You may also be interested in:

My latest posts: