How to shift from saving to investing

Edmund Lao1SOME time ago, I received a communication from an organization that talks about  “losers.” The firm proclaimed that “savers are losers.” At first blush, it seemed to me that the message made some sense. But after mulling over it, I changed my mind.

Actually, I tend to agree with the idea that savers are, in a sense, losers. However, I am a firm believer that savers can definitely become winners!

As most everyone knows, saving money is the hardest thing to do. This is because we are conditioned to crave for instant gratification. When we have money, we automatically think of the things that we need to buy. That’s how we are wired. Thus, a change of mind-set and a lot of discipline are needed for us to become savers.

If you keep your money in a piggy bank or in a safety box, the statement proclaiming that “savers are losers” becomes true. This is because the money you put in a piggy bank will never earn any interest at all. In fact, as time goes by, it may even lose its value. Inflation could erode the purchasing power of cash stashed in a safety box.

That’s why it makes sense, as the firm proclaimed, to spend your money now than to save it, since it will not appreciate in value in the future. Right? If this is true, how can savers become winners then?  The answer is by saving the right way!

The only way to do that is to reinvent your self, from being a saver to become an investor. Money saved should be put to work 24/7 through proper “investment instruments”.  Remember that you cannot invest what you do not have. So by saving first, you can accumulate enough funds to start your investment. There are various ways and vehicles to create, invest and grow money.

Here’s a list of good strategies:

• Invest in yourself. Be healthy, so that you can continuously earn income actively and passively. By staying healthy, you avoid monstrous medical bills.

• Invest in time. Time is money, so it pays to start investing early on. Make use of the power of leverage and the power of compounding interest. Time can be your best friend or worst enemy. Learn how to make time work for you.

• Invest in education. Be up-to-date in financial information by attending seminars, reading books and business publications like the BusinessMirror. In addition, surf the Internet for investment tips. There are many blogs with useful information to help improve your knowledge. Network with people who share your passions and beliefs. If you want to be rich, look for the righteously rich and make these people your mentor.

• Invest in assets. Look for assets that can make your money work for you. Assets can be in the form of real estate, paper assets, your talent and craft, precious metals, etc.

• Invest in business. Put up a business that can make use of your expertise. Not all businesses will succeed, that’s a fact. But with hard work, dedication and sacrifice, you may yet succeed. Just follow the examples of Filipino taipans like Henry Sy, Lucio Tan and John Gokongwei, who all made it big from humble beginnings.

If you have no savings, would the investments mentioned above still be possible? A lot of financial problems can be avoided if you have your own savings. Without savings, the people usually resort to borrowing to solve their financial problems.   

Which brings me back to the message I got from the organization talking about “losers,” and the questions that popped in my mind:

• What was their purpose in sending the message that said “savers are losers”?

• Were they trying to educate me on money matters?

• Were they trying to encourage me not to save, but instead to spend all the money I have?

• Were they trying to lure me to attend their orientation, and then sweet-talk me into “investing” my money in their consumption-based business offering?

Based on our discussion above, in my honest opinion, the main objective of the message is to condition my mind to believe that I, as a saver, am a loser. That I have to follow what they preach if I want to become a winner.

There is the possibility that the source of the message is either broke or is on the verge of bankruptcy. It gradually dawned upon me that if I do not save and do what they say, I will only be making them rich.

Before taking any action, critical thinking is a must, especially in forming an important financial decision.  The winner is always part of the answer, the loser is always part of the problem.

The winner has a dream, the loser has a scheme. The winner sees possibilities, the loser sees problems. Are savers winners or losers? You be the judge.

Edmund Lao is a registered financial planner of RFP Philippines. To learn more about value investing strategies, attend the globally recognized Accredited Financial Analyst (AFA) program from August 22 to September 26. For more details, inquire at info@rfp.ph or text <name><e-mail><AFA> at 0917-3464126.

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