Ever wondered where is your money safer – Under your Mattress or your Bank? I posed this question to 10 families I knew.
9 out of the 10 families responded “We feel the Bank is safer. Even though the mattress would make access to the cash much faster.” Interestingly the 10th family did not pick either of the choices. They asked me a question in return – “Safe from whom?
Now for the first time, I started to see a great conversation brewing. “Safe from anything and everything”, I replied. To which they responded that they have the best security system in place protecting every asset in their home and , hence, confident that the mattress would hold up great but (Ha the proverbial finally came).
And they went ahead to elaborate on the reason why they did not pick up the bank. Their bank today provides them roughly a 0.1% Rate of Return which no doubt is better than 0%. The topic was now leading to growth and no longer remained at safety.
Now let us do some maths:
| Amount in their Bank today | $100,000 |
| Annual Return | 0.1% |
| Total Amount after a Year | $101,000 |
| Rate of Inflation | 5% |
| Amount after inflation | $95,950 ( Hmmm) |
I was thinking to myself that while this is true with most of us, not all of us think this way. Our hard-earned money on which we have already paid taxes is in our bank A/Cs earning, so-called interest, (which by the way will also be taxed). Is not any fun at all.
I complimented them on their thinking and asked them what they should do about this. To which they innocently replied, “Wish we knew”. There are so many options – stocks/ real estate/ crypto- but do we fully understand them?
Our conversation proceeded interestingly as I went ahead and explained to them the 7 components of investment.
What are the 7 Components of Investment?
So, we need to look at it in the right way every single time when we leave our money in the bank. But does that mean that I shouldn’t have any money in my bank? I do not say so. You should have money but only to the extent of being able to call it as your “Emergency Fund” – Something to manage for 6 months of expenses in case anything doesn’t go as per plan. For the rest of your money, you must ensure that you are investing it wisely while keeping the 7 components in mind.
So, is there an engine that helps you address the 7 Components effectively?
You bet there is. And at WealthBeing we believe that everyone is entitled to know how money works and how they can make it work for them.
Don’t wait Act Now!
So is there an engine that helps you address the 7 Components effectively?
You bet there is. And at WealthBeing we believe that everyone is entitled to know how money works and how they can make it work harder for them.
