Want To Be Rich? DON’T Save Money.

As soon as I left school, I started my first job and I saved every penny I made, which made me a multi-millionaire and gave me the life I’d always dreamed of. This statement isn’t just false, it would have been downright impossible. The trouble is, many people that want to get rich are falling for the money-saving trap. Why? Because it’s exactly what they want you to believe. They want you trapped in a constant cycle of never having enough. So you’re forced to work a job you don’t enjoy until you’ve saved enough to retire when you’re old and grey. If you want to get rich, then you need to break out of this system, but it’s not going to be easy. When I say that you have little to no chance of saving your way to becoming a millionaire while you’re still young, I’m not trying to crush your dreams. Quite the opposite, I want you to accelerate your timeline and start building the life you want now, while you’re still young enough to enjoy it.

So if you want to become rich, then listen closely and things will start to become clearer.

Part 1: Your Money Isn’t Real

The Illusion of Control

Would you like to live in a world where all your choices are influenced by someone behind the scenes, secretly pulling the strings and conducting your life like some kind of orchestra? Of course, you wouldn’t. Unfortunately, this is far closer to reality than you might realize. For years now, institutions like banks and governments have been taking advantage of people who haven’t been taught how to manage their money. And it’s not their fault, as schools just don’t teach them this stuff.

Saving money gives people the illusion of control. Meanwhile, the banks are making big profits right under our noses. Let me explain.

From Gold Standard to Fiat Money

In the past, you were actually able to walk into a bank with your money and demand to exchange it for gold. This kind of makes sense, as it’s a bit inconvenient to travel around with big blocks of gold in order to buy goods and services. So, therefore, money was created.

This was called the Gold Standard, but it stopped in 1933 and the US dollar, like most other currencies, became what we call fiat. The money you have in your wallet is fiat money, as it’s most likely a government-issued currency that is not backed by a physical commodity. This means that your dollar only holds value because the government says it does, which gives them much more control over the economy, as they can decide at which rate it’s printed.

So, it turns out that the money most people chase and hoard is a bit like monopoly money. It only has value because the game says it does.

Banks’ Self-Interest

To put the icing on the cake, the banks then offered to store your money in return for a measly 0.5% interest. All the while, they’re using it to generate huge profits. It’s no secret that banking is one of the wealthiest sectors. However, it wasn’t always this way. They used to be just a place that looked after your money and made a fair profit. However, over the years, they’ve just become more and more hungry for new ways to use your hard-earned money to boost their income. An example of this is the selling of subprime mortgages, which was one of the reasons for the 2008 financial crisis.

Just to clarify, I’m not saying the banks are completely evil, they just act in their own self-interest, just like most other businesses. So we can’t blindly trust them to have our backs.

The Value of “God’s Money”

Many millionaires such as Robert Kiyosaki, who’s the author of Rich Dad Poor Dad, are very keen on saving what they call God’s money, which is gold and silver. They call it this because it has real value, rather than the promise value of fiat money.

In my opinion, this is a good strategy for the rich, as it offers a great way to protect your wealth. However, you’re trading potential growth for security, which isn’t right for everyone, especially while you’re young and you can afford some risk. I still feel like a spring chicken in my 20s, so I don’t hold that much gold. I’m far more interested in other assets. We’ll get onto those a little bit later.

Part 2: Your Money Is Disappearing

The Loss of Purchasing Power

For this next point, imagine you have, let’s say, $10,000 in your bank account earning 0.5% interest per year, which is well over the average rate in the last five years. If you froze yourself for 1,000 years in one of those cryogenic chambers, when you emerged and checked your bank account, you’d have nearly $1.5 million. Isn’t that absolutely amazing? Well, actually, no, it’s pretty terrible because that $1.5 million would buy you less than the original $10,000 would today because even though it’s had all that time to build up, it’s been losing 1.5% in value every single year.

Now, obviously, this is a pretense scenario. However, the point remains the same: by leaving your money sitting in a bank account, it’s actually slowly being eaten away by inflation every single year. I’ve seen this firsthand, as the same dollar today used to buy me far more when I was younger. With a dollar, I could buy a movie ticket, a bag of popcorn, and a portion of chips on the way home. Now, it won’t even buy me a Tango Ice Blast Slushy—whatever that is.

At the time of writing this article, the rate of inflation is reported to be 3.67% in the USA. But in reality, it’s probably a lot higher than this. The way they measure inflation is just so prone to being manipulated, but we won’t go into that right now. The main point is that your money is becoming less and less valuable by the second.

Causes of Inflation

But why does this happen, and why can’t we just stop it? Well, the first factor is called demand-pull inflation. A good example of this is the car shortage during the pandemic. This caused a higher demand for used cars, which drove up the price.

The second factor is cost-push inflation. I’m very familiar with this, as I’ve been developing a couple of houses recently and the building materials, as well as wages, are going through the roof—quite literally, through the roof.

The third factor that everyone always talks about is increased money supply. Inflation is caused when the money supply increases faster than the rate of product production. Put simply, when there’s just too much money and not enough products, like when all that free money was being pumped into the economy during lockdown.

So, I hope you can see now that your savings are being eaten away from every angle.

Part 3: Spending Isn’t the Answer

The Consumption Society

We live in a consumption society that has psychologically programmed us to behave in a certain way. You’ve been lied to all your life by your parents, your friends, and your teachers, leading you to be tricked into doing things you actually don’t want to do, and on many more occasions than you realize.

So, I’ll give you the choice, just as Morpheus gave Neo in The Matrix: You take the blue pill and you wake up tomorrow and you believe whatever you want to believe, or you take the red pill and you realize how deep this rabbit hole goes.

As I have no way to know which pill you picked, I’m going to assume you want to know the truth. Once you start seeing money differently, and as a tool to grow your wealth, rather than something you just use to buy things with, then you can have everything you ever want.

Emergency Funds vs. Spending

It’s important to have an emergency fund of three to five months of your living expenses, but you should only dip into this as a last resort, and not take a spontaneous trip to the Caribbean. (Yeah, I know I said it the American way, but it sounds so much cooler than the Caribbean. Caribbean.)

Part 4: How You Can Beat the System

The Power of Market Returns

The markets will historically give you an average yearly return of 8 to 10%, which would be a good option for most people. Of course, this isn’t guaranteed, but if we look at the last 100 years of data, it seems pretty reliable, and it’s certainly been my experience. It’s extremely simple to log into an investing app and buy a low-cost index fund like the S&P 500 and just hold it long term.

Four Investing Considerations

But there are four things you need to consider before you start investing.

1. Low Pricing and No Fees: The first thing is transparent, low pricing and no fees for investing in ETFs, as you really don’t want to be paying 1% fee every time you buy an ETF. This will just eat into your returns.
2. Money Market Funds: The second thing is the ability to invest in money market funds, as they normally have better interest rates than savings accounts while not being as risky as investing in stocks. Instead, these money market funds invest in high-quality short-term debt from governments, banks, or corporations. These are great, as you can draw your money out very easily, and the interest, otherwise known as the yield, is paid into your account on the first of every month. But it’s worth noting that money market funds are not insured or guaranteed, unlike savings accounts, which are under FSCS protection, and may lose value.
3. Multi-Currency Accounts: The third is a multi-currency account, which you can use to earn interest on your non-invested cash sitting in your account, ideally at rates of up to 4.5% for the Great British Pound and US Dollar, as well as 3.25% on your Euro account.
4. Wide Range of Stocks: And lastly, I like to make sure I have a wide range of stocks available to me, as I hate being restricted by the platform I decide to use.

Part 5: You Need to Start Now

The Risk of Not Taking a Risk

Many people see saving lots of money as a safety net. I’ve even heard some people saying they like the look of the numbers on the screen. But what they don’t realize is the opportunity cost. How many times have you been sat on the sidelines watching people make money and thinking, “When is it going to be my turn to make some?” Just think of all the people that left their money in their savings accounts during the last couple of years because they were too scared to take a risk. The scary thing is that the biggest risk often turns out to be not taking one at all, as they end up missing out on some crazy crypto and stock market profits.

Fractional Shares and Opportunity Cost

Currently, many people say Tesla stock is overvalued, and due to this, they deem the stock untouchable and are waiting for the price to drop before investing. But things can change so quickly. Between August and October 2021, Tesla stock jumped from $700 to near $900. So the cost of waiting here is 35%. But if you don’t have that kind of money, then you don’t need to buy a full stock for $700. You could just invested as much as you would have liked and bought a fractional share. So, if you’d invested $100, you’d have made $35.

On top of this, the average savings account interest rate is 0.06%. There is no opportunity here. The bank takes your money and invests and loans it out at far greater rates than this. Money is for emergencies, enjoyment, and investment. Therefore, you don’t need everything on hand 24/7.

Moomoo for US Viewers

By the way, for all my American viewers, you can get 16 free stocks worth between $2 and $2,000 by signing up for Moomoo with my link in the description. It’s basically free money and they’re a great investing platform.

Money as a Tool

Now, I’m not going to pretend I don’t save money because of course, I do. In fact, to tell you the truth, I’ve always saved more money than most investors. However, the idea of saving all your money in a bank account is boomer thinking. It might have worked back in my day, but now things are changing and we need to adapt. I’m quite optimistic about the future, as people really seem to be taking control of their finances, which is a great sign. The truth is, money is a tool, not to be hoarded, but to be used. In my opinion, you shouldn’t keep all your money on the sidelines, as it’s much better to let it go out and play. More often than not, the worst that will happen is you’ll be back where you started.

Remember, you miss 100% of the shots you don’t take.