When personal finances are discussed, the experts usually divide people into savers and spenders. We ran across a press release from Fidelity, the mutual fund giant, about a survey of workers in the non-profit world. They asked the participants if they were a saver, a spender or an investor.
We thought it was very astute to add that third category. Which one do you fit in?
The workers in the study split themselves about evenly between saving and spending. 46 percent claimed to be savers while 45 percent admitted to being spenders. So that leaves only 9 percent who classified themselves as investors.
Merging the two categories
We suspect that fewer people today would classify themselves as spenders than say a year ago. A lot of us are getting on the savings bandwagon. That’s definitely a step in the right direction, but saving it isn’t good enough.
This data suggests a bigg idea. We shouldn’t think of ourselves as either savers or spenders. We should always think like an investor. We should merge the two categories – spender and saver – into the third category – investor.
We must know how to invest it or we won’t end up with the resources we need to live the life we want.
From spender to investor
Here’s some good news for spenders: thinking like an investor doesn’t necessarily imply that you don’t spend. It means that you spend differently.
You look at every single dollar you spend as an investment. Is it going to bring you enough return to make it worth giving it up? And that “return” may not come in dollars earned on dollars invested.
It may mean that it adds enough to your level of “happiness” to make spending the money worth doing. If it passes that test, then spend, spend, spend! If not, hold onto it.
For example, you may see a real deal on some non-perishable consumer good. Buy it. Stock up. Say an item is on sale for half off. Let’s pretend that you know that it only goes on sale once a year. If you buy a year’s supply, you’re making 100% on your money. That’s hard to beat!
So get to know the promotional cycle of the brands you use regularly and time your investment appropriately. Know when various businesses need the money more. For example, from car dealers to contractors, there are seasons when people are buying a lot and times when people aren’t. Time your purchase for their slow periods and reap the benefits.
From saver to investor
Now let’s think about savers. It’s great to save, but if you’re only earning two percent on your money, where’s that getting you?
We know … we know … you’d rather earn 2% than lose 40%! We completely understand that thought process.
However, investors don’t operate out of fear. They operate rationally. And we have to resist the temptation to go with the masses because they’re usually wrong in the long run.
Just like with consumer goods, there are some real deals out there on assets right now if you can afford to hold them long-term.
The best time to get out of a particular market is often when everyone else is getting in. And the best time to get in is usually when everyone else is getting out.
Years ago, we were told by a very successful real estate investor that when you see the no-money down real estate infomercials proliferating, it’s time to get out of real estate. How many of those do we see now compared to three years ago?
Now think about stocks. Many of the same people who are touting doom and gloom now were spouting off about the end of the business cycle and the ever-upward spiral of stocks just a couple of years ago.
So to think like an investor, think for yourself.
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Thanks so much for spending some time with us today. Join us next time when we ask, “Does haste still make waste?” Until then, here’s to your bigg success!
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(Image in today's post by woodsy)