Investing For A Better Tomorrow
The first step toward building wealth is saving money. We often think about ways to save money and understand why it is important but most do not understand the actual purpose of saving money. Once you have set aside money in an emergency fund and you have paid off your debt, the next step is to SAVE TO INVEST.
Investing is simply putting your money to work for you by laying out money today with the expectation of getting that money back plus more in the future. That is the idea when you hear people talk about getting a return on their investment. If you do not currently invest, the only thing that you are able to trade for money is your time. The problem is that you only have a certain amount of time and it’s very hard to build wealth by trading time for money. You have to put your money to work so that you are earning money even when you are on vacation or sleeping.
Here is a simple example to illustrate the idea of investing
A small business owner spends his days typing letters on his typewriter and he gets paid a certain amount for each letter he writes. If something happens to cause him not to be able to work then he doesn’t get paid. Also, the amount of money he can make is limited because there is only so much time in a day and so even if he stays up all night long he will always be limited to the number of letters that he can type in a day. The business owner decides to save up enough money to buy a computer and a printer so that he can print as many letters in an hour as he used to be able to type in a full day. The investment that he made cost him money initially but the return he made on his investment caused him to make much more in return. Now the owner can save money quicker to hire more employees to do the work so that he can have time off to spend with his family and even though he is not working he is still making money.
The moral of the story is that you want to have income-producing assets.
Albert Einstein called compound interest the 8th wonder of the world.
“My wealth has come from a combination of living in America, some lucky genes, and compound interest.” – Warren Buffett
TOOLS AND RESOURCES FOR INVESTING
Investing can be complicated and so it is important to keep it simple and only invest in things that you understand. We will cover the things that you need to know to start investing so that you can create generational wealth.