Sunday, April 14, 2013

Why Trade, Invest or Save Your Money?

        As the days pass one by one, the cost of goods and services rise with inflation. I see people buying in the next new cell phone although there current one works excellent and stills over a year left on their cell plan. I see people buy a new car every 3-4 years just because they want a new car.  The cost of living will rise quicker than raises you MIGHT receive from your employer.
       What is a person to do to live a less stressful life. A person needs to live below their means and pay themselves first. You can do this in 2 ways:
  1. Save/invest/trade this money. The income that is generated stays in these accounts and gets reinvested by using DRIPs or reinvested along with fresh capital in new assets. This income can be either capital gains, dividends, distributions, option premiums, or interest.
  2. Pay yourself first a giving percentage of every dollar no matter where it comes from. You will be increase your means this way in a more tax efficient manner.
The First Way  

      This is the most common way people live below their means. No money is taken out until you have enough income to be financially independent or want to retire. The exception is taking money out of an emergency fund it an emergency occurs.  In order to avoid debt, you will have to save extra money to buy the things you want.

The Second Way

     This way allows you to increase your means as your income increases through the cash flow or capital gains of your assets.

Which way is better? Only you can decide that?


     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk