Day 28: Reviewing Your Options
by Edward Smith
02 Aug 2020
The Next Ten Year Plan
If you read my last article entitled: 🤠How to Stop Being a Zero and Start Being a Hero!
You would have read how I would spend all of my money and would have nothing left over to show for it. I could tell that wasn't a good plan and that it wasn't going to work long term, so I decided to do something about it. This is what I did.
I decided my fifty year old self would be smarter then my forty year self. I decided to lock myself into a ten year plan. I would set aside one third of my blow money every month (or twenty five dollars a week).
The idea here, was I wouldn't touch anything unless something big happened that justified the expense. For instance I could replace my laptop if that came up, but this money wasn't for buying small stupid things like coffee or beer.
At the end of the ten years I would have arrived and I would get to use the money however I wanted. Since I was voluntarily doing this, and it was still my blow money, I fully intended to enjoy it. I just wanted to enjoy the something later on, and have it be bigger and more meaningful.
I was thinking once in a life time fun things. For instance, I had lived In California for a decade and had never set foot in Las Vegas. I had always wanted to, but I had never felt I could afford to. By saving up, I could make it happen, if that is what I wanted to do. Or maybe I could buy a nice car.
I also thought it might be neat to just leave it alone and have the money sit there and produce interest. I'd be able to see it, whenever I wanted, and it would be mine. It would be like I built my own personal passive income generating machine (completely outside of the house), which would continue spitting out some extra blow money just for my own personal use. It would be like I gave myself a raise.
All of this sounded really cool.
Avoiding Bank Accounts
I love bank accounts. We run our house using them.
Bank accounts are secure, and they make paying bills super easy. If you want to put your money somewhere where you can get to it quickly, I highly recommend using them to run your household.
That being said, I do not recommend them for growing money.
Bank accounts have terrible interest rates, and if you leave your money in them, they can actually steal your money away from you slowly. I wanted something better then that.
Investing For the Win!
That led me to investing. I wanted something safe that would give me a return around seven percent. That meant no bonds, commodities, or CDs. I also wanted something safe. That meant no company dependent single stocks. Too much risk.
I began looking at mutual funds. It's what my house had been using for retirement. I was familiar with them, and I knew that they worked. Mutual Funds allow you to spread your money out across many different companies all at once. It's like being part of a crowd sourcing movement, except you're the one benefiting from it.
By joining up with a larger group, the collective can buy bigger and better things that you would never get to buy on your own, and you spread out your risk at the same time. Mutual funds perform very well, and are very safe if you stick with them long term. They're not risk free, but they're one of the best options you can find. Just know what you're mutual fund is investing in, and make sure you understand it.
Want to Know What I Invested in?
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