Save Money For Future & Get Poor

 

Save Money for Future and Get Poor

Do you know that saving money is the one of the most worst and dangerous personal advise?

Well, Yes, This is true. You may think that what kind of insane statement the above is? And how one can write such a thing on a personal finance blog?

But well, let me tell you the truth.

The truth is that, once upon a time (Before 1971), Saving money was golden financial advise and if you follow this advise, you could become financially free and rich.

But in today’s world when Central banks and governments from all around the world are printing money, this advise is no longer effective to ensure financial success. Let me explain you how?

First of all, see the following hot favourite News headlines.

DNAIndia Says,

The Reserve Bank has temporarily halted bond yields from rising by conducting an open market purchase to increase liquidity in the system.

The central bank bought Rs8,353 crore of bonds through a bond-purchase auction last week.

The total size of the auction was Rs12,000 crore, of which bids were tendered for Rs17,700 crore. The bonds were bought at a cut-off yield which was 5 basis points (bps) below the prevailing secondary market yield.

Wall Street Journal Says,

The Federal Reserve, in a dramatic effort to rev up a "disappointingly slow" economic recovery, said it will buy $600 billion of U.S. government bonds over the next eight months to drive down interest rates and encourage more borrowing and growth.

So what all of the above mean to the average people? Well, the meaning of the above headlines in simple layman’s words is that, the governments and central banks have print that much amount of money out of thin air.

When News headline says, RBI has bought Rs.8,354 crore of bonds, it means that RBI & Government of India has printed this much amount of money out of thin air.

When News Headline says, Federal Reserve will buy $ 600 Billion of bonds, it means that it has printed literally $ 600 Billion out of thin air.

So What is the problem with printing money out of thin air?

Well, you may ask that what’s the real problem in printing money like this dude? Well, the problem with printing money like this is, the newly printed money will dilute the purchasing power of the existing money in the economy by causing higher inflation.

Thus, the value of your hard earned saved money that you have put in bank savings accounts, fixed deposits and various other fixed income instruments will go down.

In short, your wealth will shrink because of these money printing activities of governments and central banks from all around the world.

And that’s why saving money is worthless now.

The modern financial advise is – Save & Invest your money.

Every time,when you have spare surplus money on hand, don’t simply save it but buy some kind of asset (Stocks, gold, real estate, mutual funds, businesses, web properties…etc..) out of it. This is because the asset is likely to appreciate in the future maintaining the purchasing power of your hard earned money.

So forget the old financial advise – Save money for the future.

But learn how to invest your money to maintain your purchasing power…!!!