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  • Rohit Musale, CFA

The Ridiculous Truth About Money

In this post, I want to talk about the biggest lie about money, that we have been conditioned to believe, for decades now.


Back in 1999, I read a book called as, 'Rich Dad Poor Dad, written by Robert Kiyosaki.


In that book, there is an interesting chapter.


The name of the chapter is 'Savers are Losers'.


At that time, I did not understand the significance of what he was trying to say in that chapter.


But now, after 23 years, I think I do.


This is exactly what I want to talk about in this particular post.


If they tell you to keep saving your money, please understand that, they don't know what they are talking about.


Why would you save your money, when all the central banks in the world are busy printing it?


Don't you know that the US government recently printed trillions of dollars in just a few months?


And they are going to print more.


What do you think will be the value of your paper currency, if trillions of dollars flood the economy.


Do you think your $1,000 or your 1000 rupees will buy the same amount of things,10 years down the line, that it buys today?


Of course not.


It is hardly going to have any value.


Someone rightly said that, 'holding $1 in your hand is like holding a piece of melting ice cube'.


Eventually, it will cease to exist.


Eventually, it will have no value.


This is what is happening to all global paper currencies in the world right now.


If I save my money, I am losing value to inflation.


Inflation is nothing but a general rise in prices, which means, inflation kills the value of my currency.


Inflation is like an invisible tax on my money.


And who creates inflation?


The money printing by the central banks.


As things become more and more expensive, the value of my savings keep going down.


This is common sense, right?


And people keep telling you to save money, save money and save money.


That too on national television.


I see a lot of so called experts telling you to save your money.


If you listen to them, then good luck to you.


Robert Kiyosaki has already told you over 23 years ago, that savers are losers.


And if you look at history in the past 23 years, you will realize that, Robert was right.


People who have been saving money, have lost a lot.


People who have invested their money, turned out to be the real winners.


Look at the United States of America.


Why are there homeless people in America?


How can there be homeless people in the richest and the most civilized, developed nation in the world?


It's because of money printing.


The little money that people have, has no real value in the real world.


Savers have lost.


Investors have won.


Do you think Jeff Bezos of Amazon saves money?


Do you think Warren Buffett of Berkshire Hathaway saves money?


Or do you think Robert Kiyosaki saves his money?


All these millionaires and billionaires never bother saving their money.


They invest it.


If you study a bit of history, you will find that, when Germany was in a war, they printed so much money, that the value of their existing savings evaporated very quickly.


The people in Germany who had been saving for their retirement, saw their wealth disappear in just a matter of one or two years, when they experienced hyperinflation in their country.


Imagine how financially disastrous that would have been for their families.


It is important to study history to get a good perspective of what is happening today.


The United States has recently printed more money in three months than what they have printed in the past 250 years.


That's a disastrous global event.


Be prepared for a global economic disaster.


That is an event which is going to affect our future and we need to be prepared for that.


'Save Your Money', is the biggest lie that we have ever been told for decades now.


It is an old concept.


It has died.


The definition of money has changed.


The world has changed.


I don't save my money.


I invest it, because I know that my savings are not going to have any value in the future.


Moreover, Robert Kiyosaki has also written one more book titled, 'Fake'.


In that book, he talks about the three kinds of money.


God's Money.


Government's Money.


People's Money.


God's money is gold and silver, the money that is naturally available on this planet.


Government money is paper currency, which is artificially created and it is not backed by gold or silver.


People's money are things like cryptocurrency.


Example: Bitcoin and Ethereum.


These are created by people and which don't have any backing from the government.


When someone tells you to save money, ask them what kind of money are they talking about?


Are they talking about God's money?


Are they talking about government's money?


Or are they talking about people's money?


If they are talking about God's money, which is gold and silver, then it is fine, because gold and silver have maintained value for more than 5,000 years.


If they are talking about people's money, which is cryptocurrency, then they probably don't know, what they are talking about.


Because the entire cryptocurrency space itself is less than 13 years old.


How can someone claim to be an expert on something that has not yet fully evolved into an industry?


So in most likelihood, when they tell you to save your money, they are talking about government money, or paper currency.


When they tell you to save money, what they are really saying is that, you must save your currency, not your money.


Because, paper can never be money.


Gold is money.


Silver is money.


But paper cannot be money.


Anything that can be created or printed in unlimited quantities cannot be money.


If you keep saving your currency and your currency keeps losing value to inflation, then you know what your financial future is going to look like, right?


It is not going to be very promising.


So, be aware of the fact that saving money is not the solution to your problem.


If you keep saving money, you will never achieve financial freedom in your life.


And you know what the funny part is: most people don't even know what financial freedom is all about.


Yes, they do want to achieve financial freedom in their lives, but they have a very vague idea of what financial freedom is and what it means to them.


I have asked so many people, what financial freedom is and almost every time, I have gotten the wrong answer.


So what is financial freedom?


True financial freedom is when your total monthly passive income either equals or exceeds your total monthly expense.


Let me repeat that.


You can only achieve financial freedom in your life when your total monthly passive income either equals or exceeds your total monthly expense.


And to earn a monthly passive income, you need assets, you need cash-flowing assets.


Robert also says that, assets are those things that put money in your pocket, and liabilities are those things that take money away from your pocket.


We must have assets in our life.


And to have those assets, you must learn how to become an investor, which means, instead of saving money, you should become good at investing your money.


Your bank account cash balance is like stagnant water.


Flowing water is always better than stagnant water.


Cash keeps losing value in the bank account.


However, if you invest it, it will start producing income for you.


Moreover, you will have to learn to become a professional investor, not just an average investor.


This doesn't mean that you need to have a finance background.


All you need is just an open mind and some basic financial education.


Basically, you must understand what are income, expenses, assets, liabilities and cashflow.


When you understand those five words, then you will have a solid foundation of financial education that will help you create assets that can give you the cashflow that you need, which will automatically create financial freedom for you.


Another point I would like to mention here is that, whoever tells you or encourages you to save money, ask them: have they achieved financial freedom in their life by saving their money?


The richest people in the world have not achieved financial freedom by saving their money.


Your responsibility is to educate yourself on some basic financial concepts so that you can take the right decisions.


This is about your life.


This is about your family.


The richest people in the world are constantly investing their money.


They are constantly moving their money.


They don't keep their money stagnant in a bank account.


You have to learn to become smart with your money so that no one can come and fool you with bad financial advice.


And 'saving money' is bad financial advice.


If someone gives you any financial advice, start asking intelligent questions so that you can learn as much as you can.


If the guy knows what he is talking about, you will end up learning more about money, else, you will at least figure out the difference between good financial advice and bad financial advice.


I want you to challenge your existing beliefs about money.


You will have to learn to become an investor.


Yes, you can save money per month from your salary or your business income.


But after you save it, you have to start investing it for your future.


Regards,


Rohit Musale, CFA


19 December 2022

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