You get tired and one day get retired from earning money, money will never! We believe, one should have the scenario depicted in the graphic beside
Making that happen is “Making Money More Productive”
Most of the time it is seen that many people earn more than enough,
but due to irrational and inappropriate management, chunk of the money gets
wasted. As a result by the end of their earning tenure, they will have just
enough (sometimes insufficient) money to live rest of their life in a confined
and perhaps compromised way.
For example, a person earning a very handsome salary (more than 3 times
of his current monthly expenses or more) would choose wrong products to save
for his long term goal, say, retirement planning. So his money won't earn good
enough returns that it is potential of. So, even after contributing excessively
to such investments, by the time he retires he will have barely enough corpus
for his retired life. This corpus perhaps be just sufficient for his simple
retired life. Well, that's not bad but it should have been a big lot
better!
Had he been managing his money wisely from the beginning he would have
had more resources to do all that he loved to do and not be confined to a
"LIMITED" life style.
One more important thing that people seem to under estimate is the
compounding effect of inflation. Most of the high earning youngsters do not
think or believe that when they retire, they would need more than double their
current salary as pension to lead very simple lifestyle. In our country Govt.
has hardly made anything for social security of the senior
citizens. We have to do it on our own for the rainy days. Hence, if money is
not made more productive, there is a high chance that they will have to
struggle for good living in their old age.
When money is invested well and made to work smartly, gradually thanks
to the power of compounding it snowballs into a big corpus / wealth that the
amount of cash flows / income generated by such corpus will be higher than the
big, fat salary / income one would be earning just before retirement. If
that is the case one would not regret losing the income because of retirement.
The graph in the picture below makes it more clear.
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