Golden Rule and Golden Eggs
The Golden Egg and The Ten Percent Account
The answer is you. You and your family’s financial future. The golden rule is to allocate 10% of any monies coming in, and place it in a 10% account. Anyone who has read ‘The Richest Man in Babylon’ will know exactly what I’m talking about.
I read the book years ago, but one thing that I remember so clearly was the example of a man whose income relied on the production of his hen’s laying eggs. When listening to ‘The Richest Man in Babylon’ and his teachings of the 10% rule, he replied he did not have much, just a few eggs. He was asked what would happen if he placed just 1 out of every 10 eggs into another basket. The man replied the basket would overflow. Hmmm ‘The basket would overflow.’
The 10% rule applies to everything you earn. If you earn an extra $100 put aside $10. You may be saying right now, I can’t do that, it’s impossible, I have too many bills and commitments, to put aside 10%.
Well I am going to be a little bold and say, you can! How many times has something come up unexpectedly and you have found the money to do or buy it? It has happened to all of us at some time or other.
Set up an account; call it your 10% account! If you can’t rely on your actions to put it aside, have it taken from your pay packet before you see it. If it was another credit card payment, or personal loan payment, you would accept it as a matter of course, and budget what was left, without even thinking about it.
For some psychological reason people often assume if it is savings, there is something wrong, because there is no way they can save. Maybe in the future, when…
I was told by a millionaire once (I am embarrassed to admit this) that I had ‘broke mentality.’ At the time I thought I was doing really well, but the slap I got, made me realize he was right. I did what the 1% does not. If there was money in the bank, I spent it. I thought I was spending it wisely, but he pointed out that because I had become so use to having a zero bank balance, when I saw money in there it wasn’t right, it had to be spent!
So, that is why I consider the 10% account a very profitable skill. The 1% population, that all do it, can’t be wrong.
Different Types Of Investments
Investments
Although that said you can start with very little outlay. Trading the E-minis market is one type of investing that does not require a huge outlay.
You should learn about the types of investment you are interested in as much as possible, and find out how other investors have fared. There are several different types of investments, and there are many factors in determining where you should invest your funds.
Investing works the same way as any other form of purchase. You would research your purchase before you made a final decision. You would not buy a new car without checking all your options. Real estate is one type of investing many feel safe in.
The stock market is a more volatile market, but there are also different types of trading. Traditional investors may buy shares and hold them for long periods. In this way they are similar to investing in real estate, with the goal being long-term growth. Over a long time frame the returns are similar for both classes.
More aggressive strategies can be employed using derivatives such as futures, options, and CFD’s. The aim here is for shorter term returns, which can be substantial, however the risks can be magnified as well. With derivatives you do not own a share of a company as you do with stocks.
In all classes of investing, usually the greater the potential return, the greater the potential risk to your capital. For example money invested in bank savings accounts are secure, but the returns are very low. In real estate and stock market investing there are huge gains to be made by those with specific knowledge.
There is no magic, and successful investors make their own luck. Investing knowledge can be learned and information is readily available. Like any other information, some is better than others. Investigating the potential returns can lead to the realization that an investment in knowledge can be the fastest and most profitable road to investment profits.
If you decided to invest in the stock market you would be wise to learn the stock market, and that in itself is a wise investment.
Planet Wealth and 21st Century have excellent training if you are interested in the stock market. Before you start trading you can ‘Paper Trade.’ Paper Trading allows you to get a feel of trading without using your own money. It is a great way to build your confidence in the dealings of the stock market.
Someone once said ‘the stock market exists to transfer wealth from the uneducated to the educated.’ They were referring specifically to financial education. It is the best education to get when considering different types of investments.
