Bitter Truth: Saving Alone Won't Make You Rich
Any investor can attest that saving is pivotal.
Indeed, it is better to put those notes aside rather than squander everything. However,
if you are seeking to create wealth, it is not the way to go. For clarity,
saving should be part, but not the process. It helps you accumulate capital
that you, in turn, use to invest. That is the only way you can build wealth.
However, if you focus on saving, you become cautious, even when a lucrative opportunity presents itself. Well, no problem when you exercise caution before investing. But remember, there is always a risk element if you are to build wealth. If you can't bear that, you tend to secure a little amount of money rather than multiply it. With that said, managing savings is a good financial discipline. It can give you a comfortable life, but not wealth. Why? Below are the reasons.
1. You become reluctant
A reason why saving won't build wealth for you is the false sense of security it brings. At the back of your mind, you know there is money somewhere. Your desire to work for more faces a major limitation.
2. Money lose value
What you could buy in the nineties varies from what you can buy today with a similar amount. Meaning if you had that cash in your account, it could be way less meaningful to you three decades down the line. Therefore, saving won't create wealth since the value of cash is in constant erosion.
3. The bank is the king
Of course, the bank is generally a safe and secure place to store your money. In fact, banks encourage you to save with them. Why? These financial institutions want those funds to do business? Which business? They trade your savings by lending, where they charge a high-interest rate to the borrowers and pay a little interest when you come for your cash.
Meaning, the bank understands that they won't get anything substantial from keeping the money lying idle. Do not expect a lot from your sleeping cash. Look for a way to put your money into action. It might seem a challenge, especially with little amounts. However, investing in online businesses is increasingly becoming a popular option due to low start-up requirements.
3. Banks collapse
You may think that your cash is safe at bank X, only to find it in the breaking news tagline. It is nothing new in Kenya, and several banks have shut their doors within the last ten years. Up to date, many are yet to recover their lost funds.
4. You have to invest
As aforementioned, it is good to save, but investing must be in your goals if you want to convert your efforts into wealth. Investing involves putting those resources into ventures that can give your money a multiplier. Fortunately, there are business opportunities in Kenya that you can get in with little capital. Other than waiting until you have six figures in your account, you start investing with the small amount you have.
Take that KES 100, 000 and put it in a savings account. Wait for a year and check whether the interests you reap can fuel a standard engine from Nairobi to Mombasa. If it does, you should think about the safety of your account.
6. Expenses
It does not matter the level of your financial discipline. There are necessary expenses that pop up, and the only way to offset is through your savings. It could be an emergency or a loss in your source of income. An effective plant to mitigate such could be setting aside an emergency fund that can take you for about six months. However, it could be inadequate, and you end up digging into your savings.
Although savings won't build wealth for you, don't lose the culture. All you need is to find a way to multiply it. A sure way to do that is to look for investment opportunities in Kenya.
Written By Fred Kabiru
Content Creator | Copy Writer | SEO Tech | Passionate about Business, Digital Marketing, News, Technology.
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