Savings and Investment

Savings and Investment
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Saving is a must for all… What we get with these savings is a safety margin that allows us to meet mostly incidentals and the best investing and get our money generates more money. Therefore it is necessary they save for everyone, whether individuals, companies or governments, saving is a source of economic stability.

If we assume that saving is a strong security Why not save everyone? Or, why it is so hard to save? Everyone can save, the problem is that most people are driven by immediate gratification, avoiding a greater satisfaction thinking they would get if they could save.

The society to which we belong, it is a consumer society, in which spending premium to savings. We are constantly bombarded with advertising and information to spend, even in totally unnecessary products that are created only to cause heavy drinking. That excessive consumption we can you extrapolate at any level, whether personal or institutional. 

Governments also feel obliged to give citizens more than they need (not now, of course), with services and facilities simply do not need or that could hold back are buying their votes, are spending or wasting public money. When the economy is in an expansion phase, that excessive consumption does not usually have major consequences, since everything is paid, including credits to which we have been forced to ask for, to get to meet greater needs, such as a home or a vehicle. At the moment the music stops, that’s when the problems really come as savings (if they had) fail to pay immediate bills, and discovered that we have borrowed excessively. 

We have already discovered that overspending and an almost total absence of savings can lead us to a desperate situation, but … How do I get to save? The recipe for saving is simple, spends less than what is entered. For families, with revenues that say “normal”, it is relatively easy save, you only need to audit that we are spending money and reduce those items where you can cut spending. One of the totally destructive expenses of the household economy, are called ant expenses, those little expenses we do every day to not give importance but are an important point when we add at the end of the month. I recommend two actions to perform to keep expenses in check and encourage savings.

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The First, take a family accounting, in which all income and expenses that are made ​​during the month, to examine where we are spending money and that can be reduced, and the second action are noted, once the first, is a forecast of revenue and expenditure, and of course saving. Having an estimate of expenditure, we will be aware of what your needs are, and how to cover them, but ultimately that forecast may divert, the ideal is to establish what expenses They are important, what not, and that amount will be performed.

The fiat money and inflation

One of the reasons why we must invest not only save, is the silent enemy of savings, inflation.

When the gold standard was abandoned in the First World War, and both governments were able to print more money than was backed by reserves in metal, standing fiat money, he fiat money, money that is backed by the confidence of people in governments, and those governments fulfill their commitments. The increase in money supply, caused by default a price increase in the goods and services we consume, is inflation.

There are many studies that talk the increase in inflation over time, their increase, decrease and the need to keep it within a range. Raging inflation causes a rise in prices of products needed and therefore increase salaries, etc, etc, entering a vicious circle difficult to stop, and an excessive fall in inflation causes the opposite effect, a decrease in wages and thus also the loss of purchasing power and job destruction. The “cursed” inflation requires us to have to do something about saving, because if we do nothing or we do not get net above inflation, we are losing purchasing power, our money that we worked so hard to save, will lose its value.

Invest as a brake on inflation

The only way we can get curb the effect of inflation on our savings is to use part of the savings to invest. The choice of asset that will allocate our investment much depends on our particular way of seeing the investment, and risk aversion. For years, this country has encouraged investment in real estate assets, the famous story, Commercial … etc.  The problem with real estate investing is that it needs to be capital intensive, that is, we need to spend and saving much money to get a unit, or the best resort to credit for investment deal.

One of the points of reference for all who seek financial independence, Robert Kiyosaki, he confesses in his books that became rich by investing in real estate assets. Investing in real estate is great as you get a steady cash flow, you can spend to cover the credit needed to meet the investment, and can also be an excess that will help you generate more investment or can used to live. Like all investments, requires knowledge about the assets in which it invests. Robert Kiyoski began investing right after a recession, when everyone had economic problems and their purchases were focused mainly on buying property people with problems (sound familiar?).

Read also: Tips for saving trick at home

I will not say that the best way to monetize the savings has thus earned will generate, what dedicate to invest in real estate, though not unreasonable, it is also true that without preparation appropriates the risk of ruin is enormous. However, stock market investment, you can bring any more investor profile, and of course do not need to ask any credence to face it, you can invest the amount you want, whenever you want. Investment in companies, buying stocks is the most liquid way of investing because anytime you sell your investment with a simple click, automatically have cash.

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