By Godfrey Kenneth Gobba
Since time immemorial we have been conditioned to believe that saving is a safe, responsible and intelligent way to manage our money.
We have been duped into believing that developing a savings culture is the best way to financial freedom. But what if saving money is in reality a very risky thing to do?
Here are a few reasons why I believe you should stop saving your money.
It’s Bloody Expensive
If you put 1 million shillings in a magical pot, shut it and chant abracadabra every day at 1 minute past midnight. After 30 days when you come and chant open sesame to open up your pot, if the magic had worked, you should find more than 1 million shillings in that pot.
But if you do find less than a million shillings in your magical pot, then you probably need to Tweet Harry Potter so he can cast you a new spell because that particular savings account is just reducing your money and will never make you wealthy.
It doesn’t matter how much you religiously save up each month or how much you pray and fast about it, if your monthly charges are higher than your monthly interest, it is just plain common sense that you are losing your money and will never ever become financially free that way.
Is it therefore any fair to you that you should work hard all month long and then have your savings account reduce your hard earned money with monthly charges?
For all your hard work and the things you go through to make that money, shouldn’t you at least enjoy the privilege of seeing your money grow every month?
Savings accounts are very expensive ways to accumulate wealth. All those monthly charges just work against you.
It’s Very Risky
Saving is immensely risky that you even wonder how we ever got duped into considering it as safe.
Why do most of us save anyway? Is it not because we have been conditioned right from childhood to believe that a savings account is the safest place for our money?
But the cold reality is that your savings account is probably the riskiest place for your money ever. And why is that? Well it’s pretty simple.
If you happened to invest your money in Shares and the Stock Market somewhat underperformed, or if you happened to invest in a piece of property and it caught fire, the loss would be right there in your face and painfully biting you hard.
But when inflation wipes out the purchasing power of those lovely savings that you call your “fallback position” or your “safety net”, it does it in slow motion style.
It kills you softly, slowly and very silently. It slaughters you behind the scenes and by the time you start feeling the pain, you will be half dead and financially amputated beyond repair.
Saving exposes you to an immense inflationary risk and by the time you feel the pain, it’s probably too late.
It’s A Shortcut To Poverty
Saving is also one of the easiest ways to become poor.
Now there are lots and lots of ways that you can successfully achieve poverty, but saving is just one of the easiest techniques ever. Just think about it. The saving formula is really very simple.
Just go make money, put it in a savings account and the monthly fees should automatically reduce your money for you every month. And every other year inflation should also automatically wipe out your purchasing power.
And voila you would have discovered an easy and automated route to abject poverty. And all you had to do was to bury your money in a savings account. Everything else was automated for you.
If charges reduce your money every month and every year you lose your purchasing power to inflation, how will you ever be able to accumulate enough money to become financially free?
Disclaimer:
Note that I am not a bank hater neither is this a “crucify your savings accounts” crusade.
This is just a humble appeal to you my reader to think logically about your money. If plan B is better than plan A, shouldn’t it be logical that you should consider embracing plan B?
If one deodorant works better than another, shouldn’t it be logical that you should opt to use the one that works better?
Likewise, if there are options that are safer, cheaper and offer better returns than your savings account, shouldn’t it be logical that you should consider using those options?
The least you could do is to at least seek information from your bank or investment professionals or Google about short term investment options that could work for you better than your savings account.
I believe that we should kill this savings culture nonsense and focus on building an investment culture.
Till next time!
The author is CEO, African Investor Academy
Email: godfrey@theinvestmentguru.co.ug
