- Feb 04, 2019
- By CrowdingLab Team
- in Other
The big goal – Financial Independence
Is it possible to work for your money for the first half of your life and your money to work for you for the second half?Sounds that financial literacy is crucial, not only for balanced finances in the present but for future stability that carries peace and perspectives with it.
It starts with learning basic concepts and rules which you can build upon on your way to the right money management and the big goal – financial independence.
It seems obvious, but many do not follow that rule. You undoubtedly know people who manage to waste all they earnings. However, if you’d like to invest and generate a return, you must learn to save money. The instability of financial markets and economic turbulence that we witnessed in the past few decades made lots of people stop trusting the financial system and investments in particular.
Despite that, the truth is simple: if you want your money to work for you, firstly you have to have money. If you want to have money, saving must become a habit or a philosophy regardless of your earnings amount.
Make your money work for you
The intuitive decision on what to do with your savings is simple: save them in a bank account. The rational decision, however, is completely different. The annual profit that can be generated with these deposits is meager – about 1% (in some cases the banks offer even negative interest rates). The deflation observed in Europe for the past years indicates there’s a possibility for interest rates to drop even more.
Then how can money work for you while remaining deposited in bank account? The answer is simple – they don’t.
For your money to work for you, you must generate return or if we must word it differently – you must not just save them but also invest them.
Investments are not territory reserved for a few chosen ones, financial experts or gurus. Making investments is for anyone who is willing to improve their financial culture and ready to use the benefits it can bring.
Plan your future
Think of your investments as a long path that you need to walk, however, you need to make the first step. Do not forget where you are going and what your final goal is: financial stability and independence. Often remind yourself this when you lose motivation, or your discipline weakens.
The exemplary table illustrates the potential that controls money well. If you start with 1200 EUR and add 1200 EUR each year, with a stable interest rate, the final results would look something like this:
Year Investment Annual return After 10 years After 20 years After 30 years
1 1.200 8% 2.398 5.178 11.180
2 2.400 8% 4.797 10.357 22.361
3 3.600 8% 7.196 15.536 33.542
4 4.800 8% 9.595 20.715 44.722
5 6.000 8% 11.994 25.894 55.903
6 7.200 8% 14.393 31.073 67.084
7 8.400 8% 16.792 36.251 78.265
8 9.600 8% 19.190 41.430 89.445
9 10.800 8% 21.589 46.609 100.626
10 12.000 8% 23.988 51.788 111.807
*Keep in mind that profit is not accumulated to the following year investment.
8% is average annual rate.
You can find projects with up to 15% in crowdfunding easily. Do the math’s and you can find yourself dreaming and enjoying your future.
If you manage your money correctly in the first half of your life, you can easily double your earnings in the second half of your life. Of course, there’s nothing secure and everything is possible. Investing is not a race, but rather a marathon that brings a reward worth the efforts. Start making your investments with Crowding LAB now!
Build your future YOURSELF!