I think our bunnies would be proud of us. We recognized that we were broke, figured out why, and slowly paid off our debts. So, since we are debt-free, what’s next?
Welcome back to the Being Broke Isn’t Cute series (part I, part II, part III); we go from broke to investors. The answer to the question above is we start to save and invest. First, we need to know the difference between the two.
What is saving? Saving is a function of discipline, cash flow, and time. We save to achieve financial security, which prevents us from falling upon hard times.
Staying Debt-Free in Your 60s
What is investing? Investing is a function of education, cash flow, and time. We invest to achieve financial freedom, which allows our family to be free and enjoy our lives fully.
Saving vs. Investing. I want to point you to the articles “Saving vs. Investing” and “Financial Security vs. Financial Freedom.” Understanding the difference between the two is vital to your family’s financial health.
How do saving and investing look? Since you paid off debt, you now have something called cash flow. Cash flow is the difference between your income vs. expenses.
The more significant the difference, the more cash flow you have. For example, if you earn $6,000/month from your job, dividends, and royalties, that is your total income.
If you spend $3,000/month on housing and utilities (with no debt), then those are your expenses. Your cash flow is $3,000/month.
Preferred Shares vs. Treasury Bonds
How does a saver spend their money? A saver may put the entire $3,000/month in a high-yield savings account. Over time, they may amass a massive stockpile of cash in their savings account, say $100,000.
How does an investor spend their money? After building an emergency fund, the investor puts their money into dividend stocks, into a business, or savings for real estate.
The investor can also invest the money back into themselves by taking courses to improve their skill set, financial mindset, or wealth & well-being.
Why is investing important? Yes, on the surface, it seems like saving all your money in a savings account or certificates of deposits will give you the financial security you desire. However, it is a trap.
Financial Independence Remain Employed
If you saved $100,000 in a high-yield savings account earning 2% interest, your money would grow slowly. However, today, the inflation rate is over 8%.
Not only will your money lose value rapidly, but you also wouldn’t know how to counteract the effects of inflation. At this point, you may seek a financial advisor who may or may not have your best interest at heart.
Negative education. I just made this term up, but you must understand what “negative education” is and how it affects you long-term.
Negative education is a lack of education that goes beyond ignorance. Basically, you know you need to learn something, but a limiting belief prevents you from traveling down the path of education yourself.
Staying Debt-Free in Your 70s
Many people suffer from negative education when it comes to money. During high school, the teachers decided who the smart kids were and who would struggle.
The kids who struggled (and even the smart kids) began to fear learning math, writing, and English comprehension.
This fear of learning is what prevents most people from becoming investors. There is nothing to fear about investing because you can invest in things that fit your risk profile perfectly.
You don’t need to invest in dividend stocks, USDC, or real estate. You can buy savings bonds, index funds, and real estate through Fundrise. However, you just need to understand what each investment does for you.
The Publishing Chronicles 3: Publish to the Widest Possible Audience
Defeating negative education. Most people want to capture some form of return from investments. They know they should be investing in something.
This is why FOMO (Fear Of Missing Out) runs rampant during bull markets. News sites and influencers hype-up situations like Dogecoin and Gamestop while the general public flock to these investments.
The public gets wiped out, and the influencers make a ton of cash. This is the result of not reading and understanding the investment cycle.
The best way to start saving and investing is to read until you feel comfortable. Then, you can slowly put your money into investments you deem safe.
Starting out as a saver. The best way to start saving beyond a high-yield savings account is through Series “I” Bonds. Here, you can see your money compounding every month.
Building an Audience 102: Adding Value Consistently
Because you became familiar with the TreasuryDirect website, you can move into Treasury Bonds. The bonds pay you interest on your checking account semi-annually. It’s an excellent way to see how interest can help you today.
The final step to being a saver is investing in USDC stablecoin. I admit this is not for the faint of heart, and you may skip this step if you are not comfortable. But, it is good to at least look at it as an option.
Starting as an investor. I would start in this order as an investor: stock market, real estate, and business.
- The stock market also has different levels: index funds, dividend stocks, and high-yield investments.
- The real estate levels are house-hacking, real estate investment trust, and rental properties.
- Starting a business in your free time is ideal. Some ways to create a home business are outside (gardening, rental car), online (e*commerce, website), content creation, and consulting.
Conclusion. I want to keep this article short because I’ve included a lot of information via links. Follow the links if you are serious about changing your life and your family’s direction.
Getting Married? 10 Financial Questions to Ash Your Future Spouse
Saving and investing are just part of the wealth-building process. You must determine “why” you want to become financially free.
Do you want to escape America with your family and live on a remote island like Bali? Do you want a $5 million house in San Diego where your family can gather and live together?
Saving and investing is only a means to an end. I want to give my family options to live overseas, in the US, or travel between the two. I want to bring US dollars wherever I go.
If I can make money from my online business (books and website), I can travel anywhere in the world and have US dollars. That means I will always have pricing power.
What do you want to achieve with your wealth? That answer is what will fuel your saving and investing for the next 30-50 years. Good Luck!
- PDF of the Month: Don’t Gamble with Retirement 7 (Free 424-Page PDF)
- Free PDF Downloads: Download FREE PDF LIST here
- Financial Mindset: Become CEO of Yourself 2 (Free 196-Page PDF)
- Retirement Planning: Your Retirement Planning Guide 2 (Free 255-Page PDF)
- Investing: How We Plan to Retire on Dividends 2 (165-Page Free PDF)
- Cryptocurrencies: Counting on Crypto 2 (Free 159-Page PDF)
- Real Estate: Financial Independence through Real Estate 2 (Free 123-Page PDF)
- Business: Retire Rich, Retire Comfortable with a Business 2 (Free 185-Page PDF)
- Latest DGWR: Don’t Gamble with Retirement 6 (Free 409-Page PDF)
- Everything!: The Biggest Book on Passive Income Ever 2! (book)(Web Edition)(Art Edition)
- I bought a Kindle Oasis: Check it out on Amazon
- Read My Books for Free: Free Kindle Books Schedule
- Crypto Exchange: My Favorite Crypto Exchange VOYAGER (Join Voyager)
- Kindle Unlimited: Why I Finally Subscribed Kindle Unlimited (learn more)
- Book Reviews: 505 Takeaways from 101 Books (pdf)
- Writing: The Publishing Chronicles (Part 1, Part 2, Part 3, Part 4, Part 5)
- Best REIT- Fundrise: REITs vs. Homeownership (Join Fundrise)
- Follow us: On our Facebook Page and Join our Facebook Group
- Monthly Dividend Tracker (XLSX): Check it out on Etsy
- For more detailed analysis, join my Youtube: MFI YouTube Channel
Monthly Dividend Tracker Template: Buy on Etsy
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
Leave a Reply