This one might be a little controversial from the outside looking in and goes against everything you have probably been told since you were a child.

“Make sure you save your pennies and the pounds will look after themselves” – Everyone’s Nan, 1998…

Kind of true, in the sense that, it might be a little better than spending every penny you get and even borrowing to spend on a pair of trainers or a car you can’t actually afford.

This is “bad debt” borrowing to buy something that either depreciates or has no sell on value. It is pointless. If you truly wish to have a fat chad purse, this isn’t the way to go about it.

You could even argue that spending every penny may be better than saving, but that is a little extreme. At least you have some fun with it and go all out in a Las Vegas penthouse.

So what are we classifying as savings? Well, taking a chunk of your income and setting it aside in a nice and comfortable bank account titled “gold saver” or something like that.

The marketing on the TV where a big horse is running through some water or a family renovating their house, it all looks great.

They are selling you the dream of –

 “Once you work hard enough you will be able to get a wage. With that wage, you give it to us and each month we update your internet banking account to reflect how much you have deposited. We may even let you change the name of the savings account to reflect what you are saving for… Finally, once you hit that goal, after spending months of frozen pizzas whilst your friends order Domino’s and buy that car or shed that you have been working overtime for”…

Once it is written down it sounds absolutely stupid.

What’s worse, whilst you build and build and build that savings account with your bank they are actually taking that money investing it and lending it out and making money on it… Does that not tell you something?

If a bank makes money from your own money why shouldn’t you? And no, we aren’t talking about that 1% a year in their ‘premium savers account’ that you pay to use…

They are making an awful lot more than that and you are just paying your own interest. It really frustrates me.

The top 55% overall wealthiest people know something that the bottom 45% don’t about money… they invest.

A large American study showed that millennials are leading the way with around 88% of them stating they have some form of investment. I believe this is down to being brought up in the midst of a financial crisis and also now a global pandemic, all the while interest rates are pathetic and pensions/401ks are nothing like they used to be.

House prices have soared whilst wages ain’t moved all that much. This has to lead to the younger generation looking for a way out of this ever-increasing sandpit of student debt and increasing cost of living.

Although 37% of the 88% of millennials who are saving are using traditional ways to save their money, bonds, savings accounts etc. this is the legacy way and isn’t going to lift you out of the ramen noodle bowl (I actually love cheap noodles).

The value of cash is going down… what does that even mean? I still get a nice paycheck each month…

As with anything, the more of something there is the less valuable it is. So when 23% of all US dollars in existence were printed last year (which is true by the way) and the UK looking to print £1 trillion, it doesn’t look good for all that cash you have tied up in your 1% a year savings account.

The US Dollar keeps collapsing against Bitcoin. pic.twitter.com/WlnyI9FA4k

— Dan Held (@danheld) March 28, 2021

Inflation regardless of the current pandemic is a killer for your savings. It effectively compounds your losses year on year. You can lose money by ‘saving’. 

So we have inflation, a global pandemic, increasing house prices against the average wage couple with increased student debt. What is the final nail in the coffin? A little thing called negative interest rates.

Yes, you read that right. effectively, it is cheaper for you to borrow money but penalises you for saving money.

It is supposed to be an incentive to get you to spend money but who is a government or bank to ‘incentivise’ YOU to spend YOUR wealth? Idiots…

The UK government keep flirting/threatening to introduce this and if it hits that another kick in the teeth.

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Where do we look to protect ourselves from this nightmare? THE STOCK MARKET, let’s get some stonks.

So definitely correct! The top 500 companies in the US stock market have outperformed the US dollar, meaning you would have been better holding your wealth in these shares long term than in a bank by quite a lot…

But…

What happens if we compare the S&P 500 against gold?

Funnily enough, when you have a finite resource like gold that can’t be printed, this outperforms the S&P 500… So the question to ask is are stocks gaining so much against the dollar or is the dollar depreciating against the stocks? Or a bit of both?

Stocks increase in value and the dollar decreases in value because more are printed. Finite precious metals, that don’t just get printed whenever a government feels like it, is then outperforming them both. Funny that…

But the eagle-eyed amongst you will have noticed that S&P seems to be increasing whilst gold is decreasing… I wonder why that is… Bitcoin.

People flock to Bitcoin as the store of value instead of investing against gold.

The same argument stands, is Bitcoin appreciating or are dollars depreciating? It is a bit of both.

It might not be as impactful when inflation just reaches a couple of per cent or even lower double-digit percentages but when hyperinflation hits and the price of a cup of coffee is $3 one morning then $30 the next which is a big problem.

That might sound ridiculous but a lot of countries have been subject to this over recent years and it usually spikes an adoption of Bitcoin to hedge against it.

Most recently, Bolivia, Turkey and now Argentina are seeing huge spikes in Bitcoin search results and adoption due to economic uncertainty with hyperinflation at the forefront.

I suppose the take-home message here is you have to have your money out working for you. I will go into this in more detail in the next article but, it can’t just be sat there gathering dust.

The world changes and so does the cost of things, you must find a way to beat inflation or the more the better in my opinion. Invest in opportunities that will increase in value over time. It doesn’t have to be Bitcoin, but it is the best performing asset class of the past decade…

If you think you have missed the boat, read this and it might convince you otherwise…

A few good books to get you in the correct mindset and looking at finances differently are –

• Rich Dad, Poor Dad – Robert Kiyosaki

• The Richest Man in Babylon – George S. Clason

• Think and Grow Rich – Napoleon Hill

Anyway, this was more of a ramble than I thought but I just wanted to outline that savings are silly when you think about it.

I will go into how to increase your chances of financial freedom in the next article so be sure to sign up to our social media channels or join our telegram to be the first to know.

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