When I say investing is a computer game, I don’t mean it’s like a computer game; it actually is one. Money, stocks and shares, even to some extent property rights are just electronic entries held in computers, just like the FIFA 17 game. There is of course a difference, the computer entries relating to investments and money allow you do buy and do stuff.
How can you win? What are the rules, and how do you exploit them?
Regular saving. If you save money every month, treat it like a bill and never touch it your savings rise like dough, quietly increasing each month and each year.
Investment Income. The income you get from your investments is really important. Yes I know that the returns in interest from the bank are tiny; but there are investments out there that give a return. Clearly you need to weigh up the risk you are willing to take.
Compounding. When you receive investment income and invest it, you get interest on interest and your money compounds. This has been called the eighth wonder of the world, and is how many great fortunes have been created.
Reduce your liabilities. Getting off the hamster wheel of debt and reducing your loan repayments maybe by having less in the short term gives you the space to save and become wealthy.
An asset gives you income a liability cost. It’s important to understand what is an asset and what is a liability. The former make you wealthy whilst the latter make you poor. So, to be clear, a new car is a liability, it costs you money, a bigger home increases your costs and is a liability but a rental property gives you income and is an asset.
Play the computer game of investment and make your life easier and richer.