Savers' Savvy Sayings (Part 2)

The following article is the second part to a two-part mini-series. This particular article focuses on useful tips associated with saving and investing.

The following article is part of a series of two. They are a collection of memorable sayings to help all people concerned with personal finance. Part 1 includes sayings associated with the building of savings in the Multimillionaire Road Get Rich Plan. These include ideas such as working hard, budgeting and careful spending to increase your wealth. Part 2 is to do with how to invest and keep those savings to build your existing wealth.

Part 2: Sayings for Keeping your Savings

Borrowing:

The borrower becomes the lender's slave

You can't build wealth if you owe others money. That is why, after paying for your needs (not wants) the next priority is paying off debt. Debt is the rock sinking your financial boat as you sail the wide Accountan-Sea. You can't ride on the waves of wealth until you unload yourself of your heavy cargo.

Saving:

Don't save what is left after spending; spend what is left after saving

As I mentioned in part 1, part of the mistake that non-savers tend to make is that they prioritize spending wrong. When they complain that there isn't money left-over after current spending to save they have already made the mistake. After paying for your needs such as bills and food, the next job is to pay off debt and then transfer money from your current account to a savings account. My personal target it 20% but I want to push that by the end of 2013 to 25%. Only after you have saved a substantial portion of your income (i.e. not simply a few pennies here and there), only then should you buy any luxuries.

Investment:

Don't put all your eggs in one basket

We've all heard this one before. It suggests that the process of investing should involve diversification of your assets. Make sure that you spread your risk over several stocks, shares, asset classes, both liquid and illiquid.

Risk:

Never test the depth of a river with both feet

The idea here is a simple but powerful one. It suggests that if you are going to invest in a risky asset class, make sure it is only a small portion of your income. This is part of the idea of diversification.

If you found this article interesting, why not check out the first part of the two-part mini-series.

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