Money Mindset

To tell you the truth, I hear so much nonsense regarding the money mindset and I thought I would share my take on it.

We're told to work hard for 40 hours a week for 40 years to retire on 40% of what you couldn't already live on in the first place.

I think it's a warped system.

Today, I'm sharing how you can escape this mindset and other ways to think in relation to money.

Let's dive in.

Why the idea of money is a problem...

In recent months and years, perhaps since COVID, we have had a lot of people speak out about the monetary system and why they believe it is flawed.

Before COVID, I knew very little about how money works and what it actually is. I was only familiar with the very little I had been told and programmed to believe.

The fact of the matter is, we're told virtually nothing about money and how our finances can benefit us, and this all stems from the educational system.

I'm not going to start bashing the educational system, I don't actually think it's the fault of the teachers as they're in the same boat, and it's another topic for another day.

But what I will say is, why are we never taught money in school?

I left school without knowing fully what a mortgage was, and it took my own initiative to deeply research money where I uncovered the truths of it.

I learnt that there is good AND bad debt, how you can leverage other people's money for a win-win situation, how mortgages work, why the banks operate and (the biggest one) how you can get money to work for you instead of working for money.

Because we're taught very little, we believe that money masters us rather than us mastering money.

Most people do this...

People don't know any better simply because of the lack of financial education.

They take their money beliefs that they have had instilled in them by past generations, and take it with them for future generations.

Take the Rockefellers, there is a reason why their family keeps the wealth legacy alive - it's because they teach their kids good financial education. Most, unfortunately, do not.

And the truth is, I don't blame them. They don't actually believe that they're teaching bad habits.

Let's look at "saving money" for example, how many of us were taught that growing up?

A penny saved is a penny earned. What a load of nonsense.

If you genuinely put your money in a savings account regularly and leave it there with no plans on investing, you will watch the value of your money erode year on year due to inflation.

People don't realise that and that's what keeps them broke.

If you're saving money to invest, all the power to you - but the truth is most aren't.

The alternative to this that we're told is to put our money in the stock market, or more recently in Bitcoin.

Do I think the stock market is a better option? Yes.

Do I think it's the best asset class? Not a chance.

Why it doesn't work...

The stock market is considerably better than a savings account because at least you're seeing a return on your money. Take the S&P500 for example, you can expect a steady return of 8% per year as an average.

As I write this, the official inflation rate in the UK is 8.7%, but it is forecast that it is considerably higher than the government are letting on.

Even based on that 8.7% figure, you'd still be losing 0.7% of your money per year.

It's better than a savings account, but still not good.

How can you consider this a good strategy if you're losing money?

People instantly see a return of 8% and think it's a good investment, but after inflation is accounted for it's not as good as it seems.

Inflation recently has skyrocketed, mainly due to everything that happened with COVID and the pandemic itself.

Savings account interest rates are increasing, but so is inflation.

I would advise you keep a small portion of money in your savings account, as an emergency fund. Alternatively, if you're saving to invest, do that too.

What I would do...

Now we understand that savings accounts are bad, and the stock market isn't much better, what is the best way to see a return on our money?

It's simple, property.

Property has been the tried and tested method for decades upon decades for wealth creation.

The beauty of property is that you're paid twice - from the rent and capital appreciation.

This means that if you get your cash flow to the amount you're earning in your job, you essentially become financially free, all the while benefiting from the capital uplift of the property.

Name me another investment that you can be paid twice from - I'll wait.

Property offers a range of strategies to implement for all individuals with high and low capital.

Trust me, you can start your property portfolio with as little as £4,000 (probably even less).

In Summary

It's so easy to think and believe what you've always been told in relation to money, but it's healthy to challenge those beliefs.

In today's newsletter, that's exactly what I have done.

Investing > Saving

This Week's Action Step

If you're looking at ways to get started to delve deeper into how money works and operates, and how you can start building and creating wealth, I would highly, highly recommend purchasing Rich Dad Poor Dad.

It's the best book I have ever read and it changed my perception on everything. It's the book that started my journey and one I think you should invest in.

That's all for today.

See you next week.

P.S. Is there a topic you're itching to learn about? Send me your ideas and I'll add it to my upcoming newsletter ideas. Thanks!