Here is a really awful truth…

I came across this and thought its worth sharing.

There is one set of rules for the rich and another set for ordinary people.

The people who are most worried about money are those playing by the old set of rules. If you want to feel more secure about your future, you need to know the new set of rules. First, here’s the first old rule of money.

Old Rule #1: Save Money

After 1971(when the dollar was no longer backed by gold), the U.S. dollar was no longer money, but rather a currency. As a consequence, savers became losers. The U.S. government was allowed to print money faster than it could be saved.

When a banker raves about the power of compounding interest , what he or she fails to also tell you about is the power of compounding inflation —or in today’s crisis, the power of compounding deflation.

Saving money is a stealth way the government takes your money.

New Rule #1: Spend, Don’t Save

In the new rules, it is more important that you know how to spend your money, not just earn or save it.

In other words, people who spend their money wisely will always be more prosperous than those who save their money wisely.

Of course, by spend I mean invest or convert your money into long-lasting value.

The rich understand that in today’s economy you cannot become wealthy by sticking your money under a mattress—or even worse, in a bank. They know that the key to wealth is investing in cash-flowing assets.

Today, you need to know how to spend your money on assets that retain their value, provide income, adjust for inflation, and go up in value—not down.

Spend your way to riches,

Robert Kiyosaki

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Yes…this was definitely worth sharing Kaaba!
Thank you :grin::heart:

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I agree that investing represents the most effective money management strategy as opposed to the antiquated idea of saving. Nonetheless, I would argue that a comparison between the poor and the rich doesn’t yield a fruitful exercise. I think a relevant criterion would be the degree of financial literacy of people, where a small degree of financial literacy leads to poor management of financial resources. Although financial literacy is more widespread among the group of ‘the rich’, it does not follow thereafter that ordinary people are categorised as financially illiterate by default. :grin:

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I agree with you to an extent @RazvanPaun, I think financial literacy is not necessarily an issue for the ‘rich’ any more than it is for the ‘poor’ but I think there are a few other factors to consider as well. The first is that it is that access to managed funds and the like has, undoubtedly, been easier to access for those who already have some excess money. High fees and minimum investment amounts often exclude those of us who have less to put in. Also, I think it’s helpful to remember that the classic idea of ‘rich’ and ‘poor’ is often not helpful as we are very much dealing with a sliding scale here. Often there are people who are somewhere in the middle, who do have a little spare and would like to invest but do not have the financial acumen to know what to do with the extra money they do have.

I feel like this is really what’s important about Pynk. It’s important that we break down these barriers, people can invest from as little as $1 (although in reality, I doubt investing a dollar is going to be much benefit to people) and, provided they participate in the prediction process, they can have fee-free access to a fully managed investment portfolio. It’s just a matter of getting the message out there.

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I find that your arguments are contradictory. You initially state that financial literacy is not necessarily an issue. At the same time, you ascertain that people with spare financial resources may not have the financial acumen to make good financial decisions, as highlighted in the quotes I extracted.

I think that the poor, the middle class and the well off can all be classified as people with some excess money, as you mention. Note that my assertion does not include people living below the poverty line. It is true that there are exponential differences in the amount people in different social classes are able to put aside, nonetheless, they still do (or are able to do so) - be it in hard cash, saving accounts, ISAs/401k, investment funds or self-managed portfolios.

This is a reality of the past though. Note that my point of reference is the developed world (particularly the U.S. and UK). The proliferation of exchange-traded funds (ETFs) drove a substantial decrease in fees among investment managers by giants like Vanguard, Blackrock and others. It is for this reason that we see consolidation in the industry (see Charles Schwab’s acquisition of TD Ameritrade). In effect, small and medium-sized investment managers reduce fees as well to remain competitive (that or double down on the idea of active investment). In a nutshell, fees are becoming negligible.

Minimum investment amounts are similarly accessible in most cases. For example, Hargreaves Lansdown, the UK-based marketplace for investment funds, requires a minimum lump sum of £100 pounds to invest. The minimum is even lower when looking at digital alternatives - Pynk’s direct competitors.

Given that the barriers imposed by fees and minimum deposits are lifted, the outstanding problem remains financial education. This does not solely refer to where to put one’s money, but also to spending habits. It can be ascertained that people who leave beyond their financial means - by purchase luxury goods they can’t afford - do not have the financial education to understand how to distribute their income for the long term benefit (this is a prevalent issue in Romania - the degree of financial education is dangerously low).

Pynk is, of course, well-positioned to compete for market share in the space as well as further democratise investing.

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Hi @RazvanPaun,

Except that’s not what I said, nor is it the point I was trying to make. My apologies if I have mislead. I said it is not necessarily for the rich any more than it is for the poor. In other words in both groups we would probably quite easily find people who, for whatever reason, are not financially educated. I absolutely think that financial education is an issue and that’s regardless of, so called, ‘social class’. Hope that makes a bit more sense?

I completely agree with you about ETFs and access to low fee investments. Things are definitely starting to change for the better.

I suppose one advantage the wealthy would have over the poor is their ability to sort of outsource or bypass their education by hiring financial managers.

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I see what you mean now. I am glad to have read your clarification :smile:!

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