Rules The Rich Don't Want You To Know-2: Don't Keep Your Money in Cash!

It must have crossed your mind that there may be rules that the rich do not want you to know. But do you know what those rules are?

In our last article, we discussed the first rule that the rich don't want you to know, that you can never get rich on a salary. In the second part of the series, we will talk about the mistake that many people make to hide their money.

Don't Keep Your Money in Cash!

Don't keep your money in cash because as long as your money stays in cash, it loses value. At this point we will talk about the time value of money. Inflation factor must have come to your mind as a reason for the depreciation of money. It's not wrong, but inflation isn't the only reason. With or without inflation, money will lose value as long as it stays in cash. This is the reason for the emergence of the concept of interest. If the lender/institution waives today's use of the money in a loan or investment, there must be some provision for it. The counterpart here is interest, which is called cost for the borrower and profit for the lender. In a sense, money depreciates over time at the rate of interest determined in two financial agreements. To give an example; Let's assume that you have a 12-month term loan amounting to $ 10.000, which you have been paying for 3 months and you have used with a monthly interest rate of 1.59%. The company you work for also needs to pay you a premium right now, but it is constantly postponing it. You went to work today and your boss stated that he is sorry for not being able to pay for a while, and that he will pay the premium of $ 5000 you deserve as soon as possible. You get along well with your boss, you love your job, you didn't elaborate on the subject by saying that I'll get it anyway. Have you thought about what this delay has caused you financially? Have you thought about what you could do if you got $ 5000 today? As the first option, you could deposit $ 5000 as it is and reduce your installment amounts and the burden of interest. With an approximate calculation, your loan installments would decrease from $ 935 to $ 325, and this early payment would have reduced your total interest and tax by around $ 470. As a second option, if you had decided to invest your money with an annual interest of 8.75% for up to 9 months, instead of closing your loan, your interest income in this case would be $ 250. Here are examples of what we call 'opportunity cost' in finance, explaining why it is more valuable than the $ 5000 you will receive in the future. In other words, the money you have is more valuable because it has the potential to generate returns. In other words, if your boss makes this payment after 9 months, it will mean that you cannot evaluate any of the opportunities in the examples. Therefore, instead of keeping your money in the old fashioned way and reducing its value, you can put it in any investment tool that suits you and make it valuable years later.   You can let us know your favorite investment tool in the comments..