The traditional financial wisdom has always been to save, save, save. We've been taught to save our hard earned money, and many believe that it's the best financial move to make. But let's take a moment to really think about what's happening here. When you deposit your money into the bank, you're essentially giving them an interest-free loan. The banks then take your money and lend it out to other borrowers at an interest rate that often passes 6% per year in 2024. What do you get for your money in return? Well, a tiny slice of the profits usually 0.01% at most of the big banks, which is absolutely garbage. So who's really winning here? Spoiler alert it's not you.
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The truth is, putting your money into a savings account alone won't bring you the financial freedom that you're looking for Now. Don't get me wrong. Saving is a great starting point, but it's just that a starting point. Your money can do so much more for you than just sitting in a bank account collecting dust. I actually recently talked with a friend who had saved $100,000 in about five years. He was just piling money into his savings account every paycheck and calling it a day. Although that is a nice pile of cash to save up, it could have been much more if he was investing it rather than simply saving. The worst part he was earning about $10 per year with that $100,000 sitting in his savings account. His reasoning he was afraid to lose money in the stock market. I completely understand that fear. It's a valid feeling to have when you're just starting your financial journey, especially with how complex the financial world can seem. It's also never a good idea to run into investing without educating yourself first. But if you invest the time to educate yourself around long-term investment strategies, index funds, compound interest and market cycles, you'll quickly realize that not investing is the biggest risk of them all. In reality, my friend was already losing money each year due to inflation by keeping his money in his savings, and he wasn't even realizing it. One important thing to note is that the rich don't become rich by saving money. They get rich by investing their money. Now you might be asking yourself okay, josh, this all sounds good, but invest in what exactly? That's a fair question to bring up, especially if you are a complete beginner to the financial world. But at the end of the day, it all boils down to investing your money into things that generate you more money without you having to directly sell your time. This could be in the form of investing in businesses that provide value to the world in the form of selling a product or a service. This could be investing in something like real estates to provide shelter in an area that people want to live in, or even starting your own business that solves a problem that your unique skills can solve and scale up with the help of other people. So, yes, there are many options to pick from when it comes to investing.
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The stock market alone can seem intimidating to anyone just beginning their financial journey. Nobody wants to jump into the stock market and lose money. They want to make money. If they didn't, they wouldn't put their harder money into the stock market to begin with. Now, maybe you've heard some stories about the stock market and have been convinced that the stock market is just a giant casino. This is a common limiting belief that many new investors hold, but let me say this there is a huge difference between investing and gambling. Gambling is buying a random stock and hoping it goes up. The key word there is being hope, and a lot of new investors fall into this category, unfortunately.
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Investing, on the other hand, is buying stocks that you fully understand. It's also diversifying your investments and playing the game with decades in mind, not days. It doesn't help newer investors that there are so many different ways to invest your money. The good news you don't have to have it all figured out to start your investment journey. My personal suggestion is to start simple. Build a portfolio of index funds that hold all of the top performing stocks, like VOO or FXAIX, to create a foundation and start building an investor mindset. Index funds allow investors to own all of the top companies with ease, effectively reducing your risk by automatically diversifying amongst the top companies in the world. The cool thing about investing in index funds is that if a company starts to massively fumble, turn unprofitable and lose market valuation, it will get booted out and replaced with a better company, all without you having to do anything.
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I don't know if this is a good time for you to take action, but if it is, you can learn more about index investing and the stock market in general through my money mastery training. I designed this training over the past three years to help complete beginners build an investment strategy and invest with confidence. Warren Buffett, one of the greatest investors around, has regularly recommended that investors put their money into an S&P 500 index fund and call it a day. I don't know about you, but if one of the best investors around recommends something, I tend to take notes and educate myself on it. Warren Buffett has even mentioned that after his death, 90% of the cash inherited by his family must be invested into an S&P 500 index fund.
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At the end of the day, by strategically investing in assets like index funds and adopting a long-term investing mindset, you can make your money work harder and more strategically than you work. This is how you build real wealth and take control of your financial future. You'll also never look at money the same the day you make your first dollar outside of work. Don't forget you have the power to change your future. The fact that you're listening to this podcast means you're already on the right path to do so. The key is to not let your money sit around making someone else rich. Take control and make yourself rich instead. Let's crush this incredible journey towards financial freedom together.
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I hope you found this podcast helpful. If you did, do me a quick favor leave a five-star review on the podcast platform you're currently using to listen to this song. The more people that we can help find our digital podcast community, the more guests we can have on to learn from and grow together. Well, that's it for this episode. I will be back next week with our co-host and a new special guest for another amazing MarketHussel podcast. I'll see you then. Bye-bye.
