Quit the Chase - Part 2

The story of wealth & wealth continues..

So now you started saving. Well done if it became habit, you have already done an achievement that will pay off with time, and if you commit to it for long enough alongside some other steps that we will talk about in the coming chapters, you will get to a position where you will be able to quit the Chase.

With days passing obviously your savings are growing, and the question here is shall I wait to hit a certain number or amount saved to start having my money earn. And the answer is definitely not. You should start having your money earn today and for every day that passes, however, what changes with time is what is your money earning from and how much is it earning??

If you have few hundreds of dollars today obviously purchasing?assets would not be a valid healthy option.?

Remember, all through our thesis, we have few rules: (here are a few of those that are relevant to this moment, and we will talk about others as we go by)

1. Emergency funds :?

• we always keep an emergency fund that equates to three months of basic expenses.?
• if we hold investments, we always keep three months of the independent investments expenses.

2. we will never over borrow?

• Do you want to maybe get there or definitely get there. If you want to maybe get there, then take tremendous risk none?calculated and none?logical so you either make it big or you don’t. Yet I always wanted to definitely get there and I hope you also want to definitely get there.?
• Do not take on bad debt which is debt that will not earn you from investments you would use to purchase.?

So to go back to our savings that are growing by the day and have been for a few months now and will be growing going forward, how are our savings earning??

At this stage, after following the two rules that?we just committed to, the best bet to earn and compound revenue passively (without investing time with it) of our savings would be a bank deposit or a similar instrument, which is pretty liquid at the same time, allows you to compound returns. Let’s remember this money will not be profiting as it sits, it actually will be losing money because what it will be earning in those instruments will generally not cover inflation however, earning a little bit is better than earning nothing while you develop your nest egg.?

And we continue growing our money day by day and month by month until we have enough to do the first investment without touching the emergency fund that we just committed to.?

Now comes the time for some housekeeping, and this is pretty exciting, regardless who you are. At this stage we will open our bank. Yes if you are Mohamad, it is Mohammed’s bank. If you are John, it is John’s bank if you are Kate it’s Kate’s bank. If you were Julie,?here you go now you have Julie’s bank. We will also open our investment fund.?

Prior to doing that, we will learn about the power of compounding. And we will learn about basic personal accounting that’s nonconventional and most of you would laugh while hearing it and comparing it with what you do today, yet it’s the best for a future financial well-being.?

We will start obviously by learning the power of compounding, and then we will go forward a chapter at a time.?

Here i need to start by talking to everyone who is 20 years old today and then to everyone else. It's time that is your biggest friend, and you have more of it than anyone else reading today.?

And here is a fascinating demonstration by numbers:

If you have $1,000 in savings today that earns 5% in annual interest. In year one, you’d earn $50, giving you a new balance of $1,050. In year two, you would earn 5% on the larger balance of $1,050, which is $52.50—giving you a new balance of $1,102.50 at the end of year two.

If you left $1,000 in this hypothetical savings account for 30 years, kept earning a 5% annual interest rate the whole time, and never added another penny to the account, you’d end up with a balance of $4,321.94.

That's interesting isn't it. Yet you haven't seen the best of it..?

if we invest $1000 every month starting at 20 for 35 years at 5% interest only we will end up with $1,089,0000. Yes you heard me right, this is a million USD. While if you calculate your contribution you have saved a total of $360,000 only.?

Magic!!?

So for this day and every day, passing in your life, remember this is the power of compound interest on your savings. Remember that each one dollar man meaningfully spent today is not a dollar spent. It is $1089.?

This give you a headache. Take a break rethink this part over as this will be the base of what you will think of every day while heading towards your goal.?

Remember, as well if debt is what you had rather than savings compound interest will have a similar effect on it yet the other direction.

UPA!! Now we can start with the next level of having fun.?

Opening your bank and your investment fund. Trust me it's pretty easy. Once you start the world will change in your eyes.?

Wait for it. While waiting master what we've learnt todate.?