Welcome back to this weekâs newsletter!
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Today, we're tackling a common myth: that you can save your way to wealth.
I have so many co workers who hoard their money in traditional bank accounts. They work so hard for their money, but fear investing so they just save, save save.
While saving is a crucial component of building wealth, itâs not the full story and won't get you very far. Let's dive into why saving alone won't make you rich and what you should focus on instead.
The Limitation of Saving
Saving is often the first piece of financial advice we receive, and for good reason. When I was younger, my parents instilled in me that in order to be succcessful, I'd have to just work hard and save my money. So early in my career, that's what I did. I remember having $25,000 at my Wells Fargo bank account when I moved out of my parent's house. I was so proud of myself.
We all know the importance of having an emergency fund and having that cushion for unexpected expenses. However, there's a limit to how much you can save. Your income is finite, and even if you live frugally, there's only so much you can put aside. Meanwhile, inflation continues to erode the value of your savings. This means that, over time, the money you save today will be worth less tomorrow.
The Real Path to Wealth: Investing
While saving is about preserving your wealth, investing is about growing it. This is why I teach nurses to invest. This is why I am "nursewhoinvests". To build significant wealth, you need your money to work for you. This is what investing is. By putting your money into assets like stocks, real estate, or a business, you tap into the power of compound growth. Over time, this can exponentially increase your wealth, far beyond what saving alone could achieve.
If You're Scared of Investing
Now, I understand why investing could be scary for some. Investments always comes with risks and that typically means the "risk of losing your money". If you don't know anything about investing and scared to invest right now, the best you can do is #1 MAXIMIZE your earning potential and #2 Keep your emergency fund or savings in a high yield savings account (HYSA).
I use ALLY BANK and Capital one for my HYSA. These banks give over 4% of interest (which is better than traditional banks that give 0.1%). That $25,000 I kept in my Wells Fargo before only yielded less than a dollar interest for the whole year. (contains affiliate link)
and lastly, START EDUCATING YOURSELF ON HOW TO INVEST.
Why Relying on Savings Alone Is Risky
Relying solely on savings also means youâre missing out on opportunities. If your money isnât growing, you're effectively losing ground. Additionally, unexpected life events, like medical emergencies or economic downturns, can deplete your savings faster than you think. Without investments to fall back on, you could find yourself in financial trouble.
The Balance Between Saving and Investing
Itâs important to strike a balance between saving and investing. A good rule of thumb is to first build an emergency fund that covers 3-6 months of living expenses. Once that's in place, start investing regularly. The earlier you start, the more time your investments have to grow.
Take Action: Start Investing Today
If you havenât started investing yet, now is the time.
I am hosting a masterclass this weekend called Investing 101 Masterclass where I will teach you how to invest in the stock market as a beginner and how you can automate your investments. Whether youâre interested in stocks, real estate, or other assets, there are countless resources available to help you get started. Donât let the fear of risk hold you back. Remember, not investing is a risk in itself.
Conclusion
Saving is essential, but itâs just the first step on the road to wealth. To truly build financial freedom, you need to invest in assets that grow over time. By making smart investment decisions, you can achieve the financial security and independence youâve always dreamed of.
Until next time, keep growing your wealth and taking steps toward financial freedom!
Stock Market News
- Bureau of Labor Statistics saying job growth was nearly 30% below initially reported -Turns out, the U.S. economy created 818,000 fewer jobs than it originally reported in the 12-month period leading up to March 2024. - this means less spending power which can affect Fed cuts
- 2.9 Billion Records Stolen in Massive Data Hack: A staggering 2.9 billion records, including Social Security numbers, were stolen in a massive data breach, potentially affecting millions of people so make sure you check if you are affected by this. It is very important to protect your credit and identity
- Gold prices surge to record high-Gold has surged to a record $2,521.36 per ounce, driven by expectations of U.S. interest rate cuts and global economic uncertainty.
Quote of the Week
If you don't enjoy the journey, you may not enjoy the destination.
This applies to almost everything in life including the journey to financial freedom. There's no point investing tons of money if you are not enjoying your money. Always spend on things that YOU VALUE and will bring you happiness and cut down on expenses (and people) who make you miserable.
Have a great week ahead~! - Ellaine
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