When it comes to the best investment that you can make, the conversation will usually turn toward stocks, housing or possibly collectibles. Rarely, if ever, will you hear talk of "saving money" as the best investment that you can make. The truth is, however, that for the vast majority of people,
saving money is by far and away the best investment that can be made. This is especially true for those just beginning to invest that have not yet accumulated a nest egg.
There are a number of compelling reasons that saving money is the best investment you can make. First and foremost is the fact that saving money is an extremely low risk investment to make. While it is possible to lose money while trying to save it, these instances are few and far between. For example, a person that drives all over town in an attempt to get the best price on a certain item may spend more money on gas than they saved on the product or your try to fix something to save money and do such a poor job that it costs more for someone to come and repair your damage than it would have originally cost to have the problem corrected. While these instances do happen, they are the exception rather than the rule and losses when trying to save money usually occur when you try to do something that takes technical skills that you don't have.
In addition to being a low risk investment, saving money also produces much higher returns than you typically get from other investments. A 20% return in most cases would be considered average at best, and returns of 50% or more can be had by those that truly focus on making this investment a priority. To make the investment even more appealing, the high returns often are received instantly and not over the entire year period. By
reducing your current costs and buying the items you need
at below retail, you receive the returns immediately.
Another huge advantage of saving money is that this investment doesn't incur any capital gains or other taxes. Unlike the vast majority of investments, the money that you save isn't subject to any taxes on the Federal, state or local level. In other words, it's one of the few completely tax free investments that exist.
While in most cases you have to pay a broker for each sale or purchase of stock or a real estate agent each time you sell a house, there are no brokerage or other fees when you invest in saving money. That means if you save 20%, you get to keep the full 20% without having to pay others a fee. It's one of the few investments where fees don't take a part of your earnings. Since there are a great number of actions you can take as an individual with no help from others to save money, there is not reason to pay anyone for the savings you receive.
Finally, saving money as an investment is one of the easiest investment strategies to implement. It doesn't require any extensive study or require a huge time commitment on your part. Strategies for saving money can be found in numerous places on the Internet at no charge. While some advance money saving strategies may become more technical, basic money saving is quite basic so that even a child could implement it.
The key to making saving money a true investment is making sure to put the money that is saved from the various activities undertaken into some type of account where it won't be spent on other things and can continue to grow in a more traditional way. This allows you to further grow your "saving money" investment and reap even higher rewards. It's unlikely you'll find another investment with all those positives that saving money contains at such a low risk.
10-26-2005, 05:02 PM
The Best Low Risk - High Return Investment
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