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Money is easy to make as long as you have a job, however what do you do when
you have the money is another question. This is a question I have asked myself
ever since I got my first part time job. Many people don’t realize that your
money can make you more money, through proper investment. Through this strategy
you can not only live comfortably now, but you can live a wealthy retirement and
enjoy your later years. One of tips which caught my eye the most was the
chapter, entitled, Ten Percent Solution. This chapter seemed to make sense to me
as I am on a limited budget with a minimum wage job.
I am one of the fortunate
students how somehow can balance school with a part time job. I do this because
it allows me some freedoms while at school, such as eating well, socializing and
trips to visit friends. I also seem to have a bit of money left over which I
leave sitting in my low interest bank account. It is this money I am hoping to
save for when I am done school and to begin my OSAP payments. Until reading the
book, The Wealthy Barber, I never really had an idea of what to do with my
money. Since I am also one of those students who is lucky enough to have a loan
through OSAP, I figured I’d better start saving or making money as it is stated.
I am currently saving money in a GIC account at a bank which has a mediocre
interest rate of approximately 4%. However, if I invest in something such as a
mutual fund for long term growth I will get a better interest rate and end up
making more money without doing anything. The nice thing about both the GIC and
the mutual fund is that they use the compound interest which allows your money
to grow at a very rapid rate, as you will slowly start making money on the
previous interest deposits as well as your own deposits which you make. However
to gain significant interest growth you must have something at a reasonable
interest rate. This book has really inspired me to do the research and start
doing this. The whole idea of this novel is to save money now and you will live
better in the future, such as when we retire. This is a great idea for all
people, especially students as we will see better results as we are still young
and can use compound interest to our benefit.
Many students at all ages don’t do
this, in fact haven’t even thought about doing this. It does sound unreasonable
and a little out of our league at present times. Especially since we are paying
tuition, books and the dreaded OSAP. However, if you think about it maybe it’s
not such a bad idea. Ten percent of most students part time job pay check is
only about $30 - $40 a month or $360 or more a year. If a good interest rate of
about 15% is found through a mutual fund and this is saved for 40 years or so,
there is a really good chance that we will be millionaires when we take it out
after 40 years. We may even have more that a million dollars after that because
being students at a university we should all receive fairly well paying jobs.
The more we make the more we will be investing, as the ten percent of our pay
check will get bigger. So as we slowly get older our payments towards our future
will get a little bigger and then the compound interest will grow on that. One
of the biggest tips I found about this whole investment advice was the fact that
you should shop around. There are many possibilities out there other than mutual
funds. At my age real estate doesn’t sound like a good choice, but it shouldn’t
be ruled out. In my case it would almost be a good idea as I am already married
and am looking for a house. Since paying rent and paying a mortgage would almost
be the same price range, it’s just that having a mortgage is a stress I really
don’t want in my life right now. However as stated in the book, The Wealthy
Barber, it is a good investment.
After seeing the demand in by students in Guelph for housing I am considering buying a house when I am done school and
renting it out to students. I could do this for many years until the mortgage is
paid off by the rent. Eventually I could use the rent money to invest in other
areas such as more mutual funds or just have a little fun with it, like a nice
European vacation. I do agree with the book in the aspect of indulging in the
stock market. I have seen a few people lose quite a bit of money in the market
and the reason is because of their type of investment. This is where a mutual
fund is better, since mutual funds will invest in several stocks, this has a
lower risk then when you doing it yourself. When people invest in the stock
market the invest in one or two companies. The are throwing all their eggs into
one basket as stated in The Wealthy Barber. There is always the chance that
those stocks could do amazing but their is a chance that they could do horrible.
With investing in many stocks there is better balance and distribution over the
entire market, so that if a few go down a few may go up as well. Another mistake
is that many buyers buy when a stock is doing well. Most of the time when they
invest the are investing when the prime growth period is gone. They stick it out
when the company starts to fall and hope that it will rise again. T
hey tend to
either sell low or lose out when it crashes. When investing in a stable mutual
fund you really are safe as through your research you will choose a professional
investor which you feel comfortable with. You must be comfortable with your
mutual fund representative as he is now handing and investing your money for
you, and you just hope to reap from the rewards of his expertise. The advice in
The Wealthy Barber about choosing a mutual fund was a bit blurry. However, as
far as I could see what David Chilton is saying is that, if you don’t understand
what is happening with your money then don’t do it. Basically don’t invest in
something that you can’t comprehend because not all mutual funds are good. You
must understand it as there are many mutual funds out there and you can’t just
randomly pick one. You must research everything, things such as; type of mutual
fund, how the investor has done in the past and how he is doing now, how long
has he been there and how long will he stay, rate of interest over past few
years, etc. If you haven’t done the research then you really don’t know what
your getting into and could end up losing money.
I am extremely glad that we had
read this book as I see it as an asset in my life. I have already starting using
it’s advice and am planning on using it in the future. I am presently getting
10% of my pay taken off my check and put it into my fathers bank account where
he is investing it in a mutual fund. He is doing this for me until I am done
school because I have little time right now. I will take over when I am done. I
don’t even notice that the 10% is off of my paycheck and I just work with what I
have right now. I have also stated my plans with real estate in the future. My
father is considering this as well since at present time it seems as though the
demand for housing is a lot higher than the supply. I am extremely happy to see
that we had to read this book. I will definitely benefit from it for many years
to come, as well so will others.
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