Understanding How Cash Affects Your Economy
So many people dream about swimming in big piles of money or stashing it under our be. Some love to picture having so much cash that it literally spills out of our pockets. It seems so fun, exciting, thrilling, and lavish but practically thinking it may not seem to be such a good idea. Movies, series and that latest Netflix show have done enough harm at misleading the construct of success to us and our generation, we look up to financial liberty in terms of liquidity, we equate our ability to afford by the quantity of cash withheld and these concepts don’t really fit to be quite healthy extensions to having attain a financially liberated state where you don’t have to worry about your status being recognized by the amount of cash you hold, possess or show off.
Golden Rule of Cash
What is the golden rule of cash? Remember that in its purest form, cash, as a a value, and in a tangible representation of wealth, very rarely increases in said value over time.. In fact, it hardly ever does. As Emmie Martin from CNBC describes it, “if you’re just saving and not investing, you’re setting yourself up to lose money in the long run.” For better understanding, let’s assume paint the picture together.
“If you’re just saving and not investing, you’re setting yourself up to lose money in the long run.” - Emmie Martin, CNBC
Assume you put $2,000 of actual cash in your sock drawer in the year 2000 (nearly twenty years ago). If you stayed disciplined and didn’t touch it (which would have been super impressive), but just checked it in 2010, it would still be worth that same $2,000. If you waited another nine years and didn’t touch it (which again would be amazing) and you checked it again it would still be worth that same $2,000.
Now let’s say, in 2000 you took that same $2,000 and converted it into an asset like Gold. In 2000, Gold was priced at $279.29/unit. You would only have seven units true. And in 2010, you would still have only had seven units because the price was the same. But in 2019, the price of Gold elevated to $1,226/unit. This units you purchased in 2000 will now value $8,788! That is a pretty big difference!
To much of our exclamation, gold is a universally valued asset and unlike most currencies its liquidity value is unaffected by the kind of national boundary. Moreover you see how the value of your $2,000 has grown organically by over 4X with you doing absolutely negligible efforts.
The most successful people look to invest their money, not save it. Turn your money into an engine, not an oven that simply burns.
It’s no longer an age where we are unaware of rising prices and reducing availability of goods and services, in such time it’s very obvious that the economy enters a phase where scarce supply ends by resulting into surged prices. The purchasing power of money is slowly fading off and we realize how there seems no alternative solution to this problem but to realize that savings in form of cash is not the wisest option. If you simply Google the world inflation rates and reasons for it and you will see how global economies are crashing and no currency is worth trust, as far as daily survival is concerned. By all means, save money and have cash on hand for emergencies. Even looking at the inflation rates over the next year, gives you insight into this. This is essential. For someone looking to create wealth, make your money an investment and an engine. Turn your cash into more tangible and universally acceptable assets like gold, silver, diamond, saffron, etc. And FYI, this has been recommended by smart investors, like Jim Cramer, for years.
Too many times we are tricked into the safety of saving as a wealth strategy. It may seem soothing to eyes is but it is actually a sweet poison that’s slowly and steadily caving into our finances and internally weakening it and with us not even realizing. So it’s time we break that piggy bank of ours and pull out those secret savings we hid at the closet sum it all up and invest wisely.
Last, remember the concept of living broke. When we have the higher availability of cash, there is generally a higher tendency to spend it. We may end up buying more and more of luxury and unnecessary products, clothes, cars, food, and more. We end up losing a lot of money trying to maintain a lifestyle that is unsustainable when we simply need to live broke and invest wisely.
All said and done we come to one golden conclusion, green cash may seem all fresh but in no time it can go stale. If you plan to preserve its value do it by trading it against something sparkling golden or silver!