Do you ever get the sense that financial institutions aren’t really out to help those of us who call ourselves their clients build up some wealth, but are rather just there to leverage the power of all our funds to make themselves wealthy beyond the wealth they already have? Well if you have then that’s because that’s exactly what’s happening.
I mean think about it – when was the last time someone was featured in the news for becoming wealthy on the back of having followed the advice of their bank to the letter? It never happens because financial institutions such as banks are in it to enrich themselves, so it may not be something you particularly like to hear, but if you want to build some wealth you’ll have to look elsewhere.
You will only become wealthy following the advice of the banks if you are already rich, otherwise you have to take it upon yourself to handle your finances in such a way as to make sure you’re making progress and not just standing in one place or worse yet, moving backwards.
A new approach to saving
It’s not enough to just put money away in a savings account anymore. In fact, this is exactly how to lose some money and in so doing defeat the purpose of what saving was meant to achieve in the first place. With the likes of negative interest rates what was recently just a matter of your money losing value due to a growth rate which is slower than inflation is now a way through which money parked in a savings account loses its buying power.
So the new approach to saving has to exist in the form of putting your savings to work and nobody said it would be easy, but you have to think about something like investing that money in assets which generate cash-flow.
For example, if you have a stockpile of cash parked in a savings account, all that you can get from that are some earnings which come in at an interest rate that is lower than the inflation rate, whereas if you rather did something like buy property and rent it out then you’re getting disposable cash out of that investment in addition to the appreciating value of the asset in the form of capital gains.
Seriously, bar for the safety and security issue of course, you’d be much better off putting all your money under your mattress and using the difference, which would otherwise disappear through bank charges and negative interest rates, to play online lotteries. At least then you actually give yourself a chance to get back some of the money you “invest” in a big way.
Otherwise this type of dynamic thinking is exactly what’s required if you’re to take control of your own finances. It’s in a sense mandatory to be continuously building your financial locomotive as you go along in response to the ever changing dynamics of the financial industry and how that affects you on a personal level.