Growing money

DSC01785_1280We’ve heard it all too many times to count, “money don’t grow on trees”. It’s true, money certainly don’t grow on trees, there is somewhere money does grow: money.

I was reading an article about someone who amassed a million dollars before he was 30 not through some lottery or inheritance, or stroke of good fortune on the stock market. One of the key he said was to remember you make money to invest, not to spend. The idea is to “plant” that money so it can grow instead of spending the money. The money you spend becomes a leaf in the wind—lost forever, you don’t want that, you want to keep the leaf on the tree, and it will feed more nutrients to the tree, help grow the tree even bigger.

No tree ever start out with a full plume, they all grow from a tiny seed. Your tree also need sunlight that is investing. Only saving is like growing a tree in the dark, sure it will grow but slower than with the help of sunlight, but make sure you have emergency fund set aside, and NEVER invest money you are not willing to lose.

let’s say you invest $1000 a month (about $30 a day, not that much money) into a investment with 6% return, by the end of first year, starting from 0, you would end up with $12,326. Your money made $326 for you while you do nothing! Doing the same over 10 years your money would make you close to $42,500!

What have I done? I’ve put some money in my RRSP (for non-Canadians it’s a tax-deferred savings account designed to encourage Canadians to save up for retirement, basically, it reduced taxable income.) account with an investment firm. Currently it’s returning a 0.7% yield but I’ve only had it for about 2 weeks. How much? $6500.

“It takes too long!”

Sure it takes time, Rome wasn’t built in one day, I’m sure you have heard of that one too. Usually, at least with the people I talked to, it means “I’m worried about a decrease in quality of life.” perhaps the problem is living way above your means, that is unsustainable (of course if you got 2 kids, 2 elderlies and a single income it should be expected to have little left over, but I’m talking about the pretty well off, young professionals with no dependents). It would take a whole other article on how to keep lifestyle in check.

If you want to see how much money you could make with investing and saving, you try this calculator to see for yourself: http://www.calculator.net/investment-calculator.html

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