Read about my successes and failures. Learn from my experiences and gain insight without losing any cash!!!
Lesson: Catching a Falling Knife
Lesson: Currency Exchange
Lesson: Mutual Fund
Lesson: Paid to Wait
Lesson: Pricing in a Downturn
This is where you’ll find find my Blog. I will comment on the latest news relating to investing, real estate, and the financial markets.
Money frightens people. It is taboo to talk about it, and as a result, many people have trouble understanding the characteristics of money and the flow of money in life. There are several important characteristics of money, and I will focus on a few of the important ones.
1. Often it is forgotten that your money is losing its value over time, due to inflation. That is the increase in price of virtually every good and service, over time. This is illustrated by the fact that a dollar today doesn’t buy the same as it did when you were younger. That is why it is so important for you to make your money grow. How do I do that? It is simple. Invest your money. Unless your assets are continually growing, the value of your money is decreasing, along with its purchasing power. Long gone are the days where we can hide our money under the mattress, or in a piggy bank. Sure, you may say it is guaranteed to be there when you need it, but you’re wrong! It’s not. In fact you’ll lose on average 6% per year. That means that in ten years, the value of one saved dollar would plummet to $.52.
This is also why many seniors find it difficult to maintain their lifestyle as they age. If their money is not invested or their investments aren’t growing, then they are depleting their asset base, and they will need to adjust their standard of livingaccordingly.
2. The second important characteristic of money, is its representation of value in society. This means that the pay you receive per hour or year, is the value of the work you add to society. Money is not just the bills in your hand.
3. A third key characteristic of money, and an important step to becoming wealthy, is to learn how money flows in systems. Whose pocket it flows out of, and whose it flows into. To illustrate this, take a family house, money is flowing out of the owner’s pocket to almost everyone: to the bank for the mortgage, to the utility company for the lights, to the cable company, to the city in taxes, and so on. Little or no money from the house is flowing into the owner’s pocket. What if we make a change? Let’s say the owner rents out a room of the house to a friend. All of the same money flows out of the house to pay the various expenses, however some money flows back into the owner’s pocket from the renters pocket. Understanding this balance, and finding ways to incorporate it into your life, is an important factor in understanding the characteristics of money.
Money is numbers on a screen representing the agreements of the world, and yes, it can be a little tricky to understand. But if you fail to understand the characteristics of money, you will be bewildered by why you can’t pay bills, or afford a nicer house, or why your next raise never seems to make an impact on your life.
Let’s start a new trend. We should talk about money and understand the characteristics of money. It is a fact of life, and one that too many are ignoring!