Search Tag: Fundamentals of money
Two fundamental rules of making million dollars or good amount of cash is to:
Saving money aside in a bank account with high interest rate will make your money worth what it really is worth. Let me give you an example: The average rate of inflation is 3%. Which means if you have a thousand dollars next year they will be worth $970. But if you put the same amount of money in a savings account or bank account with high interest rate your money will grow to $1040, assuming the interest rate is 4%. This $1040 is only worth $1010 due to the inflation. Now you see that saving money and putting it into a bank makes sense.
Many people don't realize that they are losing money by not spending it and keeping it at home or in a piggy bank. Now of course I used only a $1000 example so most people could understand the concept of inflation and realize that any spare cash at home is losing its value without even being spent.
Investing money: Now of course you aren't going to make millions by putting it in bank then why not do something with a portion of your money? That is where the concept of investing comes in. 30% of millionaires in North America earned 26% of their wealth in stocks, mutual funds etc.
By not spending you are decreasing the value of your money. It is always better to either put it in a fixed deposit account or invest it.