Money makes the world go round. Or at least that’s how the saying goes.
I heard that expression growing up but I never realized how true it was till a few years ago when I started studying money itself.
Not how to make it. Not how to borrow it.
Simply how our money system itself works.
Basically we have become a society that relies on money constantly exchanging hands.
One way this is done is by banking loaning out money to people and then getting a check in the mail each month. (or these days an electronic transfer)
Debt is what allows us to get rich faster, but only if you know how to handle it.
In my study of money I also learned that many rich people very often don’t store their wealth in cash.
The money we have come to accept as valuable is, in a word, worthless.
Sure, it has a number on it and we can exchange it for goods of that value at a store but the problem is that the note itself has no intrinsic value.
If you or I were to use a printer and make our own money we would be arrested.
Our governments do this almost daily.
There’s only one problem, the more money that is printed the less valuable it becomes.
Hence the problems in Zimbabwe. There an egg will cost you a trillion dollars.
Let me repeat that – a TRILLION
Trillion with a T.
For an egg.
How did things get so bad? The government caused hyperinflation by essentially trying to print their way out of disaster.
Anyone with money saved, lost everything they had worked for.
Gone, practically overnight.
That’s the problem with the ability to print money – greed is born.
At first our governments look out for our best interests and try to make sound economic decisions but over time each politician promises more and more to get elected.
Less taxes. More work. Better conditions. Increased care. Subsidized housing.
The list is endless.
And with each promise made, the bill gets larger until finally they can no longer pay it back.
People want things. Politicians give it to them.
Any way they can.
With the ability to create money all governments need to do in order to pay for raw materials is to print up some money.
The rich understand that which is why most of the rich people I know choose to do the following things with the cash they earn.
- Buy real estate
- Buy commodities
- Buy stocks
- Buy bonds
- Invest in companies
- Buy rare items
The rich understand that cash can be diluted so very easily.
So they have investments that are liquid giving them access to money if they need it.
One danger in keeping all your money in real estate or rare items is that it often takes time to sell them, especially at a premium.
That’s why it pays to have your money divided in cash (for emergencies and day-to-day living), stocks (investment and liquidity), businesses and real estate.
I’m very much an amateur when it comes to investing but I am studying everything I can get my hands on so I’ll let you know what I find out.
But there’s no need to wait for me, get out there and find out what works for you.
Who knows? Maybe one day you’ll find yourself one of the cash-poor rich.