so today we're going to talk about saving versus investing.
And as you guys know, the Fed's increasing rates.
So it's more expensive to borrow.
But also it's better to save.
So the rules have changed a little bit.
So stay tuned.
so number one, we all need to have savings.
But two, we all also need to invest because if you're just saving,
you're falling behind.
This is precisely the reason.
And Richard Ward, at where Robert Kiyosaki says savers are losers,
they're not actually losers, but they're actually losing against inflation.
More on that later, so for savers, typically they're not spending money
as far as investing and they're not very financially educated.
I know that's probably you are offend a lot of you, but it's true.
most people that are saving
or are afraid to invest because they lack the financial education.
Most savers work for money.
In other words, money is a claim on their time.
They're working hard, they're saving money,
but it's immediately going out in the form of rent,
car payment or even credit card expenses or things like that.
It's typically passive.
In other words, it doesn't take a lot of education
and they don't have to think about so passive means
that they just put it into the bank and it stays there until it's gone.
And then they're working from paycheck to paycheck.
Typically, savers have short term goals,
so if you're a saver, all you need to have is a little bit of a longer term goal.
typically savers have short term goals and they're working paycheck to paycheck.
Now, the reason a lot of people are savers is because there's absolutely
no risk of losing the money.
They know that if they put the money in the bank,
one way or another, they're going to get covered by the bank.
Even in these past bank failures, even the ones that we had 20 years ago,
the FDIC and the government stepped in and made sure that everybody
had their savings accounts.
So a lot of time savers perceive risk taking the money from savings
and actually investing it into something that might be growing for that.
The problem with this, of course, which is the next thing, is that
there's no opportunity for that money that they're saving to earn money.
And that's the actual and that's precisely the problem.
The money that they've got is actually going toward expenses and that's it.
it's not growing at all.
And therefore savers are falling further and further behind.
Typically, savers are low risk, low reward,
they're fear based and they have a scarcity mindset.
And this, my friends, is all just about financial education and learning.
I used to be in this exact same mindset.
My parents, many of my family members and of course, many of my friends
followed the same category.
But what happens is they're falling further and further, further behind.
They have a scarcity mindset.
In other words, they believe that they need a lot of savings
in order to afford things like vacations or food or whatever.
They don't realize that inflation is actually eroding their savings
purchasing power.
savers typically pay higher tax because many times
when you invest in things like oil and gas or real estate,
you actually have tax savings or tax benefits or even tax credits.
You often don't have those when you're just saving money in a bank account.
and by far the top enemy of savers is inflation.
And we're going to go into more detail in that in the last slide.
So now let's go to the investing side of the equation.
investors typically have some kind of a plan to invest
in something that makes money on their money.
They're typically a little more financially educated.
I'm not saying that they don't have savings, but there's a percentage
or a plan that they have each week or each month or each year toward
investing their money is typically working for them, and it's active.
In other words, it's as active as going to work.
They're taking an active role in what's being invested,
and they're not just turning their money over to a financial planner
or a wealth manager.
They typically have long term goals and that could be a vacation.
That could be another job that could be buying a house.
It could buy investor real estate, it could be whatever it is.
But they typically are very active and they have long term goals.
the one big problem with investing is risk.
It's easier to have money in savings because there's almost no risk
and there certainly is risk in investing.
And this is where the education piece comes in, because with investing,
you're actually looking for tax benefits, you're looking for passive income,
and of course you're looking for a return that's compounded year over year,
making yourself
more and more money In other words, you're earning money on your money.
So investors look for an opportunity to make money.
And oftentimes they feel like having savings is actually risky
when in reality, investing is more riskier than saving.
most investors look at savers as risky because when you're sitting
in a savings account with a low interest rate and inflation is higher,
they view that as losing purchasing power over a period of time.
whereas if they have excess savings, they're actually trying to invest it.
So they're beating inflation and therefore keeping up with it.
of course with higher risk, oftentimes you have higher
potential reward and that is kind of the whole point.
When you're setting out savings, you're fear based
and you're afraid to make a move, whereas investing is calculated,
it's strategic, and you're course trying to stay ahead of everything.
Typically, investors have more of an abundance mindset.
Of course they realize that money can make more money.
and of course, they're looking for other ways
to spread that risk over many different things, like oil and gas,
gold, real estate stocks, mutual funds, whatever it might be.
But they're typically more diversified.
In most cases, investors pay less tax.
if the government wants people to invest in oil and gas because they need it,
they actually give tax breaks and tax credits.
same thing with real estate where we get the persecution and cost, segregation
because the government actually wants people to invest in housing,
because they need housing, and therefore they give you tax benefits for that.
the top enemy, of course, in investing is you because what I've seen a lot of times
is people throw their money around without doing a lot of due diligence.
I did this myself with a gold mine in Las Vegas years ago
when I was in my twenties and I fell for it and I lost all my money.
And so for me, I realized that I had to do more due
diligence on what I was actually investing in.
I did look into the partners.
I had to look at the deals, I had to look at the returns.
I had to look at how the whole thing was being run.
And of course when I was going to get paid back.
So there is a lot more education on the investing side.
And trust me,
it's going to be how are you going to add in these crazy times that we have coming?
So whatever side you're on, whether you're save or investing,
just know that there's pros and cons to each.
But right now, especially with where we've come from with all this high
inflation, savers are actually losers because we all know
things are a lot more expensive than they were just a few years ago.
So if you had $10,000 in the bank
three years ago and you still had that $10,000 in the bank
today, it buys less of what you used to be able to have to buy.
So now let's take a look at the math between savings and investing.
So on the left side of the graph, you're going to see the inflation rates.
as you can see going back ten years from 2013, inflation
was pretty good of 1.5 up to a little bit over two,
down to about 1.4 in 2020.
and we all know what happened.
From there it jumped considerably.
So take a look at graph two.
So this was the savings rate during that period of time.
And as you can see, the savings rate was well below 1%.
The banks didn't really care if you had their money in the bank at all
and they were paying minimal interest expenses.
Now the online banks had a little bit higher.
So for those of you
who are a little bit smarter, maybe you had some online
bank interest rates that paid you a little bit more.
But you can see from the graph, if you started with $5,000,
you can kind of see that the one on the left, the traditional bank,
you barely had any interest paid on that five grand that's sitting in the bank
the same time.
Take a look at the graph.
To the left you could see the inflation rates were all over the map
and you can see that you're going backwards financially.
So if you had money in your savings account, you can see it was barely worth
the $5,000 over that ten year period.
And if you use inflation, you can see that it actually bought quite a bit last.
there's one big change
that we've all experienced in the last year with the Federal Reserve.
That is that they've jacked the interest rates.
So what's happened?
At the same time, the banks have had to jack their savings rates.
So right now it's very common for you
to have three or four, even 5% savings rates.
using the same graph to the right, if you put $5,000 in the bank at 5%,
you're now going to have $5,250.
A significant difference today's marketplace.
the other thing on the investment side,
you got to realize that you're also getting compound interest
so that $5,250 is actually going to make 262 more dollars
in the following year because you're now getting interest on interest
therefore you now participating in compound interest.
This is exactly what the investors have been trying
to do prior to these higher savings rates.
So now what we're experiencing is if you have a lot of money in savings,
you're able to get four or 5% interest rates on your savings accounts.
And we haven't had this since 1979.
So now what does it look as good on the investing side?
Because in order to make more than that, you're actually going
to have to be invested and making money at seven, eight, nine and even 10%
because the savings accounts are generating four and 5%, so as you
take a look at where to put your hard earned money, do you put it into savings
or you put it into investing, it's largely based on what
the savings account is and of course what the investing risk is.
So if the savings accounts are sitting at four or 5% and you're going to invest
in, you're only going to make four or 5%, then by all means it makes more sense
to actually save because there's less risk by saving.
But if you're going to take that four or 5% on the savings
and invest it into an asset that's producing seven, eight, nine,
ten, even 12%, then it or it makes more sense to move over
to the investing side and you might get tax benefits for.
The big issue, of course, in this last slide is all about inflation.
And of course inflation has been silently robbing us all
from our purchasing power since about 1913.
And this is a great illustration where you can see a shopping cart
full of groceries with $100 bill that I've got here in front of me.
And that's what it used to buy, of course, about 100 years ago.
fast forward to 2020, can see that shopping cart is about half full.
soon.
This $100 bill will not buy you much because inflation
will still only continue to rob your own purchasing power.
So the point here is, is if this money was saved in 1913
and it's still sitting 50 years later, it actually buys less.
And that's the point.
so as you're watching inflation, like food alone has gone up 30%
in the last three years, anywhere from 10 to 12%
per year since 2021,
I can assure you that wage growth has not grown that fast.
And so unless you're making more money, you're actually losing purchasing power.
if your money is sitting in a savings account at less than 1%.
And that is the lesson here, guys, is always monitor your hard earned money.
And what is it making in a savings account and what is it
making on investing account and what is inflation?
make sure that your hard earned money is beating inflation.
Because if you're not, Your sales are getting robbed from your own money
because inflation is actually moving faster than your money is actually making.