There’s an old saying, “It takes money to make money.”
Well, that’s partly true. However, money that is sitting idle in a savings account will not make you any money – not at 0.10% interest rates that are often seen in a traditional savings account.
[Related: With a CIT Bank savings account you can earn up to 2.30% APY.
[As an alternative to CIT Bank, consider laddering T-bills instead your savings account]
No, money must be invested into something that works harder for you like equities, bonds, real estate, and even bitcoin.
It’s a myth to believe that just saving money alone will make you rich.
Sure. There are the stories you hear about a 70-year old lady that managed to save over $100,000 by working two jobs for 40 years as a full-time maid and part-time dishwasher. While managing to save six figures from a minimum wage job is commendable, she would not have had to work so hard, and so long, if she had invested her money wisely instead.
Saving is extremely important, it’s the first step to creating wealth. But saving alone will not make you wealthy. Sorry, but you cannot save your way to wealth.
Don’t just save to create wealth
Putting all your hard-earned money in a savings account is like an athlete that goes to all the practices but never gets to play in the game.
You might have been trained to believe that the stock market is just too risky and that a savings account is playing it safe.
But I have another sports analogy to help you understand how stupid playing it safe can be. It’s like a football team that is up 21 points (Atlanta Falcons) against Tom Brady and decides to go into a Prevent Defense to sit on the lead.
In the end, you are going to lose. Like Tom Brady, inflation will look for the holes in your defense and slowly pick you apart.
Sometimes you have to take some risk and invest in something in order to get ahead financially.
How many people have you heard of that invested in stocks, real estate, or cryptocurrencies who saw their investment double, triple, and even quadruple in less than five years?
Now, how many people have you heard of whose money did the same sitting in a savings account? I bet you don’t know a single person.
That’s because a savings account was not designed to make you wealthy.
Here’s a lesson about creating wealth
You can work two jobs like the 70-year old lady that I previously mentioned. In doing so, you will set an excellent example for your kids and grandkids about the merits of hard work.
OR, better still, you can work hard and save to invest – an even better, smarter option.
Investing doesn’t have to be difficult. It’s not rocket science where you have to read 20 books that are five inches thick in order to be successful.
You can play it safe and invest in index funds like a well-known billionaire.
[Related: Learn to invest like Warren Buffet.]
While investing in index funds is a good start, you should also check out the best dividend aristocrats.
Lastly, learn the 3 Pillars for creating wealth.