A note from Stuart Zadel
06 August 2009
Dear Friend,
If there’s one thing I love it’s Sydney’s warm winter sun, and this past weekend I got to enjoy some of it whilst visiting family.
I went to a cafe in Kurnell with my dad and his best friend, and to my amazement, despite it being a gorgeous day, all they talked about was where they could get the best interest rates on their money. You see, unfortunately they’ve both "retired" (dumb thing to do) and unfortunately, so has their income. Now, because they had exchanged their time for money for so long, not only has the money stopped; so has their thinking! (Below I’ll share with you why cash is NOT an investment).
Fancy that... working hard for more than 50 years, only to huddle in cafes and worry about money. When, to my way of thinking, you should be busy enjoying your life and maximizing your golden years... where there’s no room for worry.
And if sitting in cafes worrying about money is all you’ve got to look forward to in the end, you may as well give up right now. I mean what’s the point?! You could quit your job and do that today!
It’s enough to make you cry! Well, here’s a video to make you laugh... and cry. Have you ever done something stupid and then thought, ‘why on earth did I do that?’
Well, you’re not going to believe some of these clowns... and I need to warn you, don’t try this at home! I also need to warn you that this may offend some people and if "Funniest Home Videos" is not your kind of thing, you might want to skip watching this :-)
Check it out now:
"Think and Grow Rich!"
Napoleon Hill, Think and Grow Rich.
Weekly Success Tip
Why cash in NOT an investment... but Cashflow is.
Ok, so getting back to the cafe at Kurnell, let me relate to you the conversation that took place...
One of my dad’s friends was saying how he made 6% on his self-managed superannuation fund last year. Which considering many funds reported losses of 20 – 40%, this may appear a good result. He pointed out it was locked up in fixed interest for about 5 years. He was happy with this because he is retired and so doesn’t pay tax on this income, but also because it was better than most people that have their spare cash in the bank currently earning between 2.5% - 4.5%.
What he correctly pointed out however, is most people don’t take into account tax and the hidden cost of inflation on this interest earned.
If you are working and in a 30 – 50% tax bracket, then up to half of this interest is taxed and goes straight back to the government.
Next, you have to take into account the invisible factor of inflation. Inflation refers to the diminishing purchasing power of a dollar over time. If inflation is running at 3% for the year, then your money has 3% less purchasing power than it did a year ago.
So if you are getting 4% interest, but have a 50% tax bracket, you are then down to 2%. If inflation is running at 3%... you just lost money.
Regardless of how much cash you had in the bank, in the above example you’d still be losing money!
And hence why I say, cash is NOT an investment!
What IS a worthwhile investment; is putting some regular thought and time into setting up some passive streams of Cashflow. That is, income that comes in regardless of your output.
Next week we’ll take a look at some options for you to set up passive Cashflow, but for now, you’ve got some homework to do in this week's action step.
Remember, it’s never too late to generate passive Cashflow.
ACTION STEP:
Today, with a pen and paper, take 20 minutes and write down as many answers as you can possibly think of to this power question:
How can I make $500 per day passively without working?
Of course if you want to cheat... we’ve got all the answers for you at our Cashflow Conference.
Simply click here to book yourself in today: www.ThinkAndGrowRich.net.au
To Your Success!
Stuart Zadel
Stuart Zadel
Director and Publisher
Think and Grow Rich
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